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Procurement with a Continuous Edge

Dec. 1, 2023
Procurement teams can harness the power of continuous improvement to streamline processes and optimize their supply chains.

Staying ahead of the pack isn’t always easy, and it can be especially tricky for organizations that are operating in highly competitive industry segments like electronic component sourcing. Procurement teams can do their part by continuously reviewing and improving their processes in order to navigate the persistent shifts in the electronics industry and get out in front of the competition. Even the slightest adjustments can produce significant benefits.

“Challenges stemming from the pace of change, geopolitical factors and acute market dynamics necessitate a strategic, proactive approach to supply chain management,” says Fusion Worldwide. “Buyers should be thinking about continuous improvement as challenges within the supply chain landscape are ever-evolving.”

What is Continuous Improvement?
The American Society for Quality defines continuous improvement as the ongoing development of products, services or processes through incremental and breakthrough advancements. Whether these changes are made gradually or all at once, a strategic and thoughtful upgrade can make a significant difference no matter the scope. 
Generally, continuous improvement follows a four-step framework based on a Plan-Do-Check-Act approach:

  • Plan: Identify an opportunity and plan for change.
  • Do: Implement the change on a small scale.
  • Check: Use data to analyze the results of the change and determine whether it made a difference.
  • Act: If the change was successful, implement it on a wider scale and continuously assess your results. If the change did not work, begin the cycle again.

“Other widely used methods of continuous improvement, such as Six Sigma, lean and total quality management, emphasize employee involvement and teamwork, work to measure and systematize processes and reduce variation, defects and cycle times,” ASQ points out. 

Leverage the Power of Continuous Improvement
Continuous improvement can of course be applied to many different corners of the business world—from manufacturing and customer service to sales and marketing—but procurement is especially well positioned to leverage its power. Companies that use the Six Sigma process, for example, report benefits like reduced procurement cycle times, enhanced transaction quality, fewer invoicing errors and requisitions that are coded and classified properly. 

OpEx Learning, a provider of online training and certification programs, says procurement teams are also using Six Sigma techniques to keep track of contracts created, purchase orders issued, invoices paid, and suppliers onboarded. This also includes RFQs that don’t meet standards (i.e., competitive bidding or includes a broader list of suppliers) and vendor certificate and contracts that are about to expire.

“As a tool for continuous improvement, Six Sigma encourages a paradigm shift in the way the organization handles and implements procurement processes,” OpEx Learning states. “A leaner chain is created as the variations that lead to wastage, whether with processes, equipment and human resources, are eliminated. This learner chain yields better results for both internal and external clients.”

Putting Continuous Improvement into Action
There are different ways to employ continuous improvement, but some good starting points for procurement include identifying and eliminating waste, standardizing processes to ensure everyone is handling tasks the same way, measuring and tracking progress and then using those insights to make further changes.  

Procurement teams that want to enhance a current program can also take steps like: 

  • Establishing and maintaining relationships with the world’s strongest open market suppliers.
  • Promoting active engagement throughout the supply chain team to these suppliers to spread the responsibilities around.
  • Seeking out and consuming as much market intelligence as possible, especially when it’s derived from a supplier like Fusion Worldwide, which has an ear to the ground at all times.
  • Thinking outside the box for creative solutions versus staying overly beholden to conventional ways of procuring material.

Reaping the Rewards 
Once in place, continuous improvement programs help companies adapt to dynamic conditions, better their products and services and stay ahead of the competition. 

“Diversification of the supplier base and greater inclusion of flexible, strategic open market distributors provide an excellent security blanket against critical issues,” Fusion Worldwide states. “They also give access to strategic partnerships which help mitigate financial and logistical liability and enable a leaner management of a company’s supply chain overall.”

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