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Performance Charts - Purchasing Department and Material Control Department

E

Eloy Gomez

#1
Hello:

We would like to start doing performance charts on the Purchasing department and Material Control department. What are some things we could track to help them that is valued added? Any ideas are welcomed. Thanks.
 
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Q

Quality-Geek

#2
Re: Performance Charts

Are there any key metrics that are in the business plan, job descriptions, evaluations, etc? Are there any noted issues from internal or external audits? Is there anything Management is looking for?

If you know anything about value stream mapping (I don't), you may find some items to track there.
 
M

MrMiagi

#3
You should track supplier performance as an indicator of your purchasing and materials control. This should include both quality of material delivered as well as on time delivery. If you have a receiving inspection activity, use this for the quality data on goods received. As an aside, you should be reporting this information back to your supply base. You could also apply the cost of poor quality as a cost metric on the supply chain.

"Quality isn't free, it's been discounted for a quick sale."
 
C

CGarveyX

#4
In addition to the good information in the above posts, where I work we track one other thing that could potentially be worth looking at. We looked at purchasing nonconformances where we had incorrect information on our purchase orders that lead to receiving the wrong thing from our suppliers.

This caused us to rework some of the purchasing process and an improved review procedure that has virtually eliminated this problem. Without knowing enough about your situation, I can't tell if this is something that would benefit you or not, but our receiving inspection department has noticed the difference and it has cut down wasted time from shooting ourselves in the foot with wrong information.
 
S

simonyeeklang

#5
In addition to the good information in the above posts, where I work we track one other thing that could potentially be worth looking at. We looked at purchasing nonconformances where we had incorrect information on our purchase orders that lead to receiving the wrong thing from our suppliers.

This caused us to rework some of the purchasing process and an improved review procedure that has virtually eliminated this problem. Without knowing enough about your situation, I can't tell if this is something that would benefit you or not, but our receiving inspection department has noticed the difference and it has cut down wasted time from shooting ourselves in the foot with wrong information.
Hi,
If my industry only uses 4 raw material. How would I vet my supplier performance?
What would be the criteria to put into that form?
Thanks
Simon Yee
 
C

CGarveyX

#6
No matter if you have just a few raw materials and suppliers or several hundred, I think you need to track what's important to you. What are the factors that are going to ensure the success of the purchasing process?

You might want to look at nonconformances found at receiving inspection to determine if you are getting good raw materials. If the raw material arriving on time is important, you should measure whether suppliers deliver by the expected due date. If you are experiencing errors like the ones we were dealing with, you need to make sure accurate information is being passed on to the people doing the purchasing.

In short, there is no one answer for every organization. You need to determine what matters for your success and start tracking that. I would suggest starting simple with just one (or a few at most) key indicator and build from there. If you start with a whole mess of numbers, it will be harder to determine which are really the best indicators and your management may drown in all the data!

MrMiagi's comments are along the same line and makes the excellent point of passing the information along to your suppliers.

Hope this helps!
 
H

Hodgepodge

#7
We would like to start doing performance charts on the Purchasing department and Material Control department. What are some things we could track to help them that is valued added?

What would be of value to you? Some companies track on-time delivery statistics. If you did this, how would you use the information?

For instance, any statistics you keep on suppliers should not also be a method of evaluating buyers. Such statistical studies should have a suitable degree of independence from the process being studied. Buyers should not be motivated by fear when assigning due dates or when selecting suppliers. Buyers should not be tempted to change due dates to affect their statistics. Manipulated statistics have no real value.

How are due dates set? Does this process have anything to do with how long it could reasonably take a specific supplier to deliver? This classic scenario: “Uh-oh, this order is behind schedule. Put a due date of tomorrow on the P.O.”, isn’t likely to give you very much usable information about a supplier’s on-time delivery capabilities.

Instead, let’s say you build some data over time. You find that Supplier A yields 100% quality product, but never delivers the standard size lot for a given product in less than 3 weeks regardless of the due date. Supplier B’s average delivery time is on time, but they frequently call requesting concessions or perhaps they always deliver 5 days late no matter how much lead time you put on the P.O. for the same P/N. Supplier C’s data shows great product quality but hit and miss on delivery. However, delivery from Supplier C is greatly responsive to expedite fees. When you need to place an order for P/N 123, you have the opportunity to use the data you’ve collected to determine the best supplier with which to place your order.

To make this decision you needed to track (factoring in the size of orders):
a. Product quality (including paperwork quality)
b. On-Time Delivery Performance
c. Number of days from date of order to date of delivery
d. Average days late (when late)
e. Price
f. Number of concessions requested

You should be able to determine a realistic delivery schedule with enough of the above information. The lowest price or fastest delivery isn’t always the best reason to choose a supplier. For the data to add value, you’ll need to use it to make decisions.

The above is just one example. As far as big picture decisions, CGarveyX has a great idea about measuring P.O. performance. MrMiagi points out tracking cost of poor quality. Poor performance with these items would be a good cause to audit the purchasing system. Poor performance in the other areas might be a good cause for a more detailed audit of the supplier.

These are just a few examples of supplier metrics. How will you use the information you gather? You decide what information will help you. When you start using information to make purchasing decisions, you may find you have more questions that are unanswered. Any such questions may be an indication that other types of performance should be tracked.
 
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