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How to Use Six Sigma in Procurement Activities

How to Use Six Sigma in Procurement Activities

Originating in the manufacturing sector, six sigma is a data-driven means of measuring process quality.  It’s aim?  To get as close to “perfect” as possible.  By increasing performance and reducing deviations in processes, six sigma reduces systemic defects.  This improves employee morale, productivity, and quality, overall.

How to use six sigma in procurement activities is a matter of applying the analytical aspect of the discipline for the sake of allowing your human resources to perform higher value functions.  That’s possible because six sigma identifies inefficiencies in your procurement processes and activities.

DMAIC.

Define, measure, analyze, improve and control – DMAIC is at the heart of six sigma, providing its methodological framework.  This approach is the most commonly applied means of implementing six sigma.

Each step leads to the desired conclusion, which is preventing defects instead of detecting them.  The result is improved processes featuring reduced waste/deviation, reduced time per cycle and an overall improvement in delivery at each link in the chain.

Where lean and six meet.

The lean approach is rooted in the goal of reducing waste.  While this is a priority for six sigma, it’s quantified differently and more in terms of reducing variation (errors and inefficiencies in the process).  There is common purpose between the two approaches, specifically – enhanced customer satisfaction.

That goal is reached by producing higher quality, faster turnaround times and nimble performance.  But lean’s methodology relies heavily on technical applications, whereas six sigma relies on analytics and data.

Procurement application.

In the realm of procurement, there are several areas procurement professionals can use six sigma principles to improve.  Transportation is one of them.  Are goods being moved around unnecessarily?  Why is that happening?

Accounts payable is another key area six sigma can address.  How is payment being processed and is it possible that this function might be automated?  Purchase orders are another item on the six sigma hit list.  Are your purchase orders inordinately backed up?  Can this function be consolidated, or purchases more effectively planned to avoid bottlenecks?

In the realm of your human resources, six sigma can be a tremendous support.  People can be freed to perform tasks in other areas when you identify areas of waste/variation in processes their hands are currently on.  Can these be automated?  Could your people be working in higher value areas and both improving productivity and their skill set/knowledge base?

Six Sigma represents a radical shift in the way your organization thinks about the procurement process and implements it.  By reducing the instances of variation and unnecessary expenditures in terms of human resources and processes and equipment, you create a leaner chain.  That leaner chain leads to better outcomes for clients, both internal and external.

Centerpoint Group.

Centerpoint Group is a trusted procurement advisor, bringing you the power of numbers.  We leverage $850 million in collective indirect spend, offering our members substantial savings.

By deploying the power of numbers, we reduce your costs on everyday business needs like office supplies, energy, and wireless telecom.  Contact us for more information.

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