A Purchasing Manager's Guide to Strategic Proactive Procurement David N Burt, Ph.D NAPM Professor of Supply Management and Marketing, School of Business Administration, University of San Diego Richard L Pinkerton, Ph.D., C.P.M Professor of Marketing and Logistics, The Sid Craig School of Business, California State University, Fresno American Management Association New York · Boston · Chicago · Kansas City · San Francisco · Washington, D.C Brussels · Mexico City · Tokyo · Toronto 9/7/2006 9:19 AM This book is available at a special discount when ordered in bulk quantities For information, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought Library of Congress Cataloging-in-Publication Data Burt, David N A purchasing manager's guide to strategic proactive procurement/ David N Burt, Richard L Pinkerton p cm Includes bibliographical references and index ISBN 0-8144-0288-7 Industrial procurement Purchasing I Pinkerton, Richard L II Title hd39.5.b857 1996 658.7'2—DC20 95-44558 CIP ©1996 David N Burt and Richard L Pinkerton All rights reserved Printed in the United States of America This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, new York, NY 10019 Printing number 10 9/7/2006 9:23 AM To Lamar Lee, Jr., Gayton Germane, and Bob Davis, all former members of Stanford University's great School of Business, and mentors of David N Burt To William P Stilwell, J Howard Westing, Harland E Samson, and Isadore V Fine, all professors emeriti, The University of Wisconsin, Madison, and the superb teachers of Richard L Pinkerton 9/7/2006 9:27 AM Page v Contents Preface ix Acknowledgments xv Benefits of the Integrated Procurement System The IPS diamond; success stories; the effect of quality of purchased material on productivity and profits; five approaches to doubling profits; IPS in manufacturing, service organizations and hospitals, government, and construction; purchasing and materials management; the steps to successful integration; summary Determining What to Purchase: The Design Process 23 Developing requirements; the design process and procurement; crossfunctional teams; the investigation phase; the laboratory phase; the manufacturing phase; engineering change management (ECM); key purchasing inputs; how to integrate engineering successfully into the procurement system; material engineers; design review committee; project teams; approved components list; suggestions from pros; summary Developing the Right Purchase Description to Save You Time and Money 37 Classifying an inventory catalog; requirement trade-off analysis; describing the purchase by brand name, samples, standard specifications, design specifications, or performance specifications; how to select the right approach; summary Procuring Services 49 Six major problems; objectives; statement of work (SOW); professional services; technical services; operating services; SOW language; summary 9/7/2006 9:27 AM Page vi How to Stretch Your Equipment and Building Dollar 59 Major problems; the capital equipment buying team; the capital equipment procurement flowchart; the process flow of procuring equipment; classification of capital equipment; installation; requests for proposals; supplier selection; total cost of ownership (TCO); financing vs leasing, new vs used; purchasing plant facilities; top management functions; alternative methods of purchasing construction; summary Two Key Interfaces: Production Planning and Inventory Control 72 Production planning; scheduling; forecasting; MRP; MRP II; JIT; supplier schedules in production control; the role of purchasing under MRP and JIT; proper levels of inventory; inventory costs; the fallacy of EOQ; catalogs; distribution resource planning (DRP); integrating marketing, production planning, and inventory management into the production system; electronic data interchange (>EDI); purchasing credit cards; summary To Make or to Buy: That Is the Question 96 The issues: strategy, cost, quality, quantity, service, specialized knowledge, design or production process secrecy, urgency, labor problems, plant capacity, capital equipment, use of idle resources; make and buy; vertical integration vs specialization; summary How to Select the Right Supplier 106 Prescreening; sourcing outline and checklist for major purchases; the pre-experience supplier evaluation form; the critical evaluation factors of management: financial strength, financial ratio tests, production capacity, experience, quality assurance; R&D, delivery, purchasing expertise, price/cost controls; direct or indirect, number of proposals, local or national suppliers, global sources; request to bid, quote, or get information; what is an offer?; lower bid implications; when to use competitive bidding; selecting the source; source development; supplier certification; supplier contract management; final supplier rating forms; suggestions to reduce mistakes; summary Price Analysis 132 Basic supplier pricing strategies; pricing elements under the control of purchasing; defining fair and reasonable pricing; the price analysis process; competition; catalog or market price; price comparisons; engineering estimates; keeping total cost low; transportation costs; two-step procurement; the special case of "price in effect at time of delivery"; 9/7/2006 9:28 AM target pricing and cost drivers; summary 10 Cost Analysis 146 Cost within a traditional relationship; the supplier's cost breakdown: materials, labor, overhead; activity-based costing; proof profit; the role 9/7/2006 9:28 AM Page vii of estimates; price increases; cost within a strategic supply alliance; target costing; summary 11 Value Analysis and Value Engineering 156 Development of value analysis and value engineering; principles, techniques, and examples; the VA-VE procedure; the two faces of VA/VE; the keys to successful implementation; summary 12 Quality Assurance Overview 169 Defining quality; total quality management (TQM); mapping TQM, quality function deployment (QFD); continuous improvement (CI); the major technical quality tools; statistical process control (SPC); the control; the investigative tools of quality assurance; design of experiments (DOE); Pareto analysis; cause-and-effect diagrams or "fishbones"; plan-do-check-act (PDCA); the poka-yoke system; Certification Program; the Malcolm Baldrige National Quality Award; the Deming Prize; supplier certification; benchmarking; the role of purchasing in quality assurance; summary 13 Team Building 188 What is a team?; the team's charter; a recent case history; how to have more effective teams; clearly defined objectives; explicit goals and vision; team structure and mandate; competent team members; types of team members; unified commitment; collaborative climate; the four stages of team development; standards of excellence; exterior support; recognition, rewards, and motivation; principled informal and formal leadership; the special situation of cross-functional sourcing teams; measuring team progress; final thoughts and warnings; summary 14 The Winning Way of Negotiating 199 What is negotiation?; the best of Fisher, Ury, and Patton's "Getting to Yes"; problems in negotiating; when to negotiate; what to negotiate; preparing for negotiation and fact-finding; determining bargaining strength; final agenda preparation; practice; the negotiating meetings; negotiating techniques; how to handle the difficult potential or current supplier; hints for the negotiator; terminating and/or documenting the agreement; negotiation post mortem; negotiating with someone from another culture; summary 15 Strategic Supply Management 218 Supply as a competitive weapon; integrating supply strategy with the strategic business units' (SBUs) strategy; gaining velocity during 9/7/2006 9:28 AM development and production; measuring continuous improvement; sourcing globally; optimizing the cost of ownership; centralizing supply strategy; purchasing power with measurement; data available and 9/7/2006 9:28 AM Page viii used; supply base by design; leverage supplier technology; monitoring the supply management; managing relationships; value chain management; summary 16 Planning for Proactive Procurement 229 Defining "planning"; procurement planning; the current situation analysis phase; the objective phase; the consolidation procedure as a major planning tool; the creative new action steps (the new plan); the great assumptions; the materials plan; the procurement planning chart; planning hazards; implementation, monitoring, and revision; summary Appendix A: Make-or-Buy Policy and Procedure 241 Appendix B: 248 Supplier Welcome Booklet Appendix C: The Learning Curve 269 Appendix D: Alternative Methods of Contract Pricing 274 Appendix E: 282 Other Approaches to Cost Estimating Appendix F: Special Secondary Source Techniques for Estimating Cost Components 287 Appendix G: Managing Price Increases 290 Appendix H: Statistical Process Control 292 Appendix I: Design of Experiments 297 Appendix J: Supplier Quality Survey Example 300 Appendix K: Sample Audit-Situational Analysis Questionnaire 307 Index 313 9/7/2006 9:29 AM Page ix Preface Much has happened in procurement circles since David N Burt's book Proactive Procurement was published in 1984 We like to think Proactive Procurement had at least a small part in focusing attention on the importance of procurement in containing costs, improving quality, increasing productivity, shortening concept to customer delivery times, and strengthening the integration of materials management into the total operations of an organization A Purchasing Managers Guide to Strategic Proactive Procurement retains the visionary topics of Proactive Procurement while adding the very latest and, indeed, future procurement methods for effective purchasing in the twenty-first century A great many trade books addressing an organization's relations with its suppliers have appeared recently Perhaps the most advanced is the American Keiretsu by Burt and Michael Doyle (Homewood, Ill.: Business One Irwin, 1993) Whether these books stress early supplier involvement, partnerships, alliances, strategic procurement, or supply management, all these themes require and expressly state the need for the procurement process to be a "value adder." The integrated procurement system (or IPS) as first described in Proactive Procurement adds value to the firm's operations The heart of the IPS is the cross-functional procurement team composed of representatives of Design Engineering, Manufacturing Engineering, Purchasing, Manufacturing, Quality Control, key suppliers, Marketing, and, when relevant, Finance This integrated procurement system preceded the horizontal corporation by some 10 years, and in some ways, it prepared the way for this approach to organization and management The other major action prescribed in Burt's 1984 work was the growing practice of beginning the procurement emphasis at the design stage while contracting or outsourcing maintenance, repairs, and operating supplies (MRO) and basic raw materials under long-term systems contracts and blanket orders with one or two suppliers Management is slowly recognizing that the major procurement effort must be strategic and play a key role at the product-service concept development stage At this stage, quality is designed in, cost is designed out, and the time required to bring a new product to market is reduced The foregoing changes also dictate the need for more professionally trained personnel in the purchasing or procurement function, now called supply management or sourcing by a few forward-thinking firms Gone are the days when an individual could simply progress through on-the-job-training from secretary or 9/7/2006 9:29 AM survey, and no other reproduction is permissable 9/7/2006 10:25 AM Page 301 Supplier Quality/Business Systems Qualification Record Supplier Name: _ _ _ Address (mfg site): Commodity (Team): Quality Requirements Documentation Control • The supplier maintains control of drawings and specifications that are used in the finished product inspection function Apple Manufacturing Site: Singapore Yes No N/A Material Control • The supplier utilizes in-process controls or a sampling plan for finished products to insure comformance to customer requirements In either case, the confidence level for finished products is equal to or better than the minimum required as defined by the Supplier Quality Engineer Business Requirements Financial Stability • The supplier has provided the appropriate financial information and achieved a minimum rating of People/Equipment Control • The supplier has inspection instructions for the finished product inspection function • The supplier has instructions for the calibration of inspection equipment used in the finished product inspection function • The calibration system is traceable to recognized standards ) by Apple as defined by the Apple 'caution' ( financial evaluation model Service and Responsiveness • The supplier has identified the individual(s) within the suppliers manufacturing site that is responsible 9/7/2006 10:25 AM for Apple service Capacity • The supplier's manufacturing process has the capability to support at least 125% of Apple's forecasted requirements for this supplier given standard lead time or as specified in World Wide OEM (Original Equipment Manufacturers) contracts Authorization (Name & Signature) SQE/Buyer/Procurement Engr Date _ _ Procurement Engr Mgr (conditional qualification only) _ 9/7/2006 10:25 AM Supplier Quality Development Program Supplier Self-Assessment Questionnaire Please answer the following questions For questions that require description, please type your responses on separate sheets of paper Otherwise, please circle either Yes/No/NA/Description and provide the applicable procedure number(s) You may wish to add comments where necessary Describe the reporting structure and relationships in your company Yes/No/NA/Description Procedure No(s): Describe the operating philosophies and the key business processes in your company Yes/No/NA/Description Procedure No(s): Give a brief description of how you communicate among yourselves regarding the needs and/or requirements of your customers? Yes/No/NA/Description Procedure No(s): Do you have a housekeeping program? Yes/No/NA/Description Procedure No(s): Do you have a contract review process in your company? Yes/No/NA/Description Procedure No(s): Do you have a system that assures customer's needs and expectations? Yes/No/NA/Description Procedure No(s): Are there any documented quality procedures that describe the elements of quality function? Yes/No/NA/Description Procedure No(s): Is there a document control system in the company? Yes/No/NA/Description Procedure No(s): Do you have a system to assure that your operations are provided with and updated on the new operations instructions? Yes/No/NA/Description Procedure No(s): 10 Do you have a system to assure the latest use of blueprints, specifications, and engineering change information? Yes/No/NA/Description Procedure No(s): Page of 6/Rev B PROPERTY OF APPLE COMPUTER LIMITED, SINGAPORE BRANCH 9/7/2006 10:25 AM Supplier Quality Development Program Supplier Self-Assessment Questionnaire Please answer the following questions For questions that require description, please type your responses on separate sheets of paper Otherwise, please circle either Yes/No/NA/Description and provide the applicable procedure number(s) You may wish to add comments where necessary 11 Do you have a system to select suppliers? Yes/No/NA/Description Procedure No(s): 12 Is there any procedure describing the evaluation and development of your suppliers? Yes/No/NA/Description Procedure No(s): 13 Is there any procedure that ensures that all supplier materials meet customer requirements? Yes/No/NA/Description Procedure No(s): 14 Do you have a system for the identification and traceability of your materials? Yes/No/NA/Description Procedure No(s): 15 Are you using any labelling standards? Yes/No/NA/Description Procedure No(s): 16 If you are not using any barcoding system, you have plans to so in the future? Yes/No/NA/Description Procedure No(s): 17 Do you have a documented system for identifying and controlling all materials? Yes/No/NA/Description Procedure No(s): 18 Do you have any procedure for process control? Yes/No/NA/Description Procedure No(s): Page of 6/Rev B PROPERTY OF APPLE COMPUTER LIMITED, SINGAPORE BRANCH 9/7/2006 10:26 AM Supplier Quality Development Program Supplier Self-Assessment Questionnaire Please answer the following questions For questions that require description, please type your responses on separate sheets of paper Otherwise, please circle either Yes/No/NA/Description and provide the applicable procedure number(s) You may wish to add comments where necessary Do you have any flow chart to show the process flow of your products? Is there any procedure to identify the key operating 19 characteristics of your products? Yes/No/NA/Description Procedure No(s): 20 Do you have any procedure that describes the in-process, and final process and/or test inspection program? Yes/No/NA/Description Procedure No(s): 21 Is there a system for preventive maintenance and calibration? Yes/No/NA/Description Procedure No(s): 22 Is audit performed on calibration contractors? Yes/No/NA/Description Procedure No(s): 23 Is there any procedure for the inspection and test status of your products? Yes/No/NA/Description Procedure No(s)? 24 Do you have a system for the control of nonconforming materiel? Yes/No/NA/Description Procedure No(s): 25 Do you have a system that identifies the inspection authority on a record? Yes/No/NA/Description Procedure No(s): Page of 6/Rev B PROPERTY OF APPLE COMPUTER LIMITED, SINGAPORE BRANCH 9/7/2006 10:26 AM Supplier Quality Development Program Supplier Self-Assessment Questionnaire Please answer the following questions For questions that require description, please type your responses on separate sheets of paper Otherwise, please circle either Yes/No/NA/Description and provide the applicable procedure number(s) You may wish to add comments where necessary 26 Do you have a plan to reduce nonconforming materiel? Yes/No/NA/Description Procedure No(s): 27 Do you have a system for corrective action that caters for all elements of the quality function in your company? Yes/No/NA/Description Procedure No(s): 28 Is there an inventory control system? Yes/No/NA/Description Procedure No(s): 29 Do you have a system that provides appropriate and timely data to the customer? Yes/No/NA/Description Procedure No(s): 30 Is there a system that assures adequate/appropriate packaging of the product? Yes/No/NA/Description Procedure No(s): 31 Is there a system for the handling of work-in-process goods, between operations, and from final operations to packaging? Yes/No/NA/Description Procedure No(s): 32 Do you have a system for assuring that customer packing and shipping instructions are met? Yes/No/NA/Description Procedure No(s): Page of 6/Rev B PROPERTY OF APPLE COMPUTER LIMITED, SINGAPORE BRANCH 9/7/2006 10:26 AM Supplier Quality Development Program Supplier Self-Assessment Questionnaire Please answer the following questions For questions that require description, please type your responses on separate sheets of paper Otherwise, please circle either Yes/No/NA/Description and provide the applicable procedure number(s) You may wish to add comments where necessary 33 Is there a system for retaining quality records? Yes/No/NA/Description Procedure No(s): 34 Is internal quality auditing performed? Yes/No/NA/Description Procedure No(s): 35 Does the internal quality program assure that all elements of the quality system continue to be implemented? Yes/No/NA/Description Procedure No(s): 36 Do you have a formal training program? Yes/No/NA/Description Procedure No(s): 37 Describe your support system for employee development Yes/No/NA/Description Procedure No(s): 38 Do you have a formal statistical process control program in the company? Yes/No/NA/Description Procedure No(s): Page of 6/Rev B PROPERTY OF APPLE COMPUTER LIMITED, SINGAPORE BRANCH 9/7/2006 10:26 AM Appendix K Sample Audit-Situational Analysis Questionnaire DOES YOUR PURCHASING DEPARTMENT MEASURE UP? Here's a quick quiz to help you gauge your purchasing department Ideally, all questions should be answered "y numerically, as follows: Give an absolute "yes" a Give an absolute ''no" a zero Give scores of 1, 2, or as you t system, a total score of 225-250 will indicate an outstanding purchasing group; 200-225 means good performance; mean that purchasing isn't living up to its profit potential PROFIT CONTRIBUTION Purchasing is active in (preferably leads) a formal value analysis program Standards are regularly reviewed for simplification possibilities Value analysis studies take place as early as possible in the design cycle Suppliers are encouraged to submit design ideas and manufacturing-operation suggestions Purchasing rewards suppliers who submit usable ideas Purchasing contributes to make-or-buy studies, and make-or-buy decisions are reviewed regularly Life cycle costing, not just initial price, enters into buying decisions when appropriate Purchasing recognizes that outside suppliers can easily become complacent without the spur of competition and Z 9/7/2006 10:26 AM Page 308 Purchasing negotiates firmly with outside suppliers negotiating a win-win result on price, quality, service, delivery, and legal terms Purchasing's negotiation includes application of the learning curve where applicable as well as cost/price analysis of supplier's charges Purchasing documents cost reductions Purchasing has guidelines defining a reportable cost reduction in material expenses Purchasing shares the credit for cost reduction achievements with other departments, or suppliers, when appropriate Cost-reduction projects chosen by Purchasing reflect an awareness of priorities, payback periods, net present value, etc RELATIONS WITH OTHER DEPARTMENTS Purchasing processes incoming requisitions promptly Purchasing is deeply involved in total quality management (TQM) Purchasing sometimes questions requisitions: the need itself, specifications Purchasing works with other departments to test alternative materials or products Purchasing regularly supplies pertinent data to Production Planning: lead times, tooling needs, shortages Purchasing regularly supplies pertinent information to Marketing: materials availabilities, price trends, new technology Purchasing works with Engineering and Production to ensure that suppliers receive clear instructions, readable blueprints, and other data with sufficient lead time Purchasing is working with all users and suppliers to reduce cycle time and engineering changes, returns, rejects, rework, etc The organization embraces the IPS Purchasing has a regular newsletter containing pertinent material news Purchasing regularly supplies pertinent information to Engineering: technical data on new products, updates on supplier capabilities, suppliers' R&D projects, supplier literature Purchasing regularly supplies pertinent information to management: economic news, marketplace conditions, new technology, new materials Purchasing cultivates close contact with other departments involved in the mate- 9/7/2006 10:26 AM 9/7/2006 10:26 AM Page 309 rials cycle: Production/Inventory Control, Traffic, Quality Assurance, Store, Engineering, etc Commodity-sourcing teams are efficient and effective Cross-functional decision teams are in place SUPPLIER RELATIONS Purchasing has a formal supplier certification program Purchasing has adopted the partnership philosophy with key suppliers Purchasing is completely honest in its dealings with suppliers Purchasing will not overestimate upcoming purchased goods requirements in hopes of getting a lower price Purchasing keeps suppliers' confidential data (prices, design developments, proprietary techniques) confidential Purchasing interviews supplier salespersons promptly and minimizes interruptions Purchasing arranges for supplier interviews by appointment Purchasing arranges for salespersons to interview other company personnel such as Engineering, Production, and Quality Purchasing insists that salespersons brief buyers on results of such interviews Purchasing corroborates what the suppliers say about such interviews by checking the operating staffer involved Purchasing visits suppliers' plants regularly Purchasing keeps up-to-date records on suppliers' equipment, production/quality systems, labor relations, etc Purchasing seeks alternative sources on all commodities, just in case Purchasing gives suppliers advance warning on upcoming material requirements and the buying firm enforces schedule stabilization Purchasing assists small, new sources to become dependable suppliers Purchasing has an equitable method for rating suppliers Purchasing ensures that new shortcut buying systems mesh with suppliers' administrative methods Purchasing buys from minority-owned firms 9/7/2006 10:27 AM Purchasing resists any and all reciprocal buying pressures Purchasing sees that suppliers' invoices are paid promptly 9/7/2006 10:27 AM Page 310 The relationship between the buying organization and its suppliers is one of cooperation based on open, honest communication, trust, and cultural fit Purchasing has reduced the number of suppliers and utilizes long-term contracts in a partnership relationship GENERAL Purchasing provides forecasts on material availability Purchasing provides accurate forecasts on price trends Purchasing uses scientific management techniques wherever possible, such as PERT/CPM networks for major buys Purchasing experiments with new organizational plans: buying by commoditysourcing teams, establishing planner-schedulers, use of liaison staffers, the possible split of strategic planners from tactical buyers Purchasing has a solid training program for its staffers, including tuition-paid night school courses, NAPM and other seminars, and promotes C.P.M attainment Purchasing uses appropriate benchmarks Purchasing is actively exploring global buying activities Purchasing is actively involved in the organizational planning process and issues an annual materials report Traffic audits are conducted on a regular basis The buying organization either has or is studying the possibilities of EDI The organization uses credit cards under Purchasing's monitoring Purchasing has set up systems contracts (where possible) on low-value needs, to gain time for more creative buying on major purchases Purchasing has classified inventory with an ABC analysis and is concentrating on big-ticket A items Purchasing staffers are knowledgeable in business law and ethics Purchasing distributes publications such as a purchasing manual, buying policy booklet, how suppliers can contribute value analysis suggestions, suppliers welcome guide pamphlet, the annual materials report, purchasing newsletter Purchasing is proactive and thinks strategically 9/7/2006 10:27 AM 9/7/2006 10:27 AM [...]... item that incorporates the purchased material Purchasing 9/7/2006 9:34 AM Page 13 Exhibit 1-5 The functional organization and procurement activities in the IPS: manufacturing 9/7/2006 9:35 AM Page 14 must maintain a good dialogue with Marketing on changes in material prices and availability and product acceptance relative to purchased components to allow Marketing to update sales quotations and current... Planning, an Inventory Management Into the Procurement System Purchasing managers must show missionary zeal in making Marketing, Production Planning, and Inventory managers aware of the cost and productivity implications of inadequate purchasing lead time Managers should develop examples showing the results of adequate and inadequate lead time These examplessome with happy endings and some of them virtual... reactive purchasing department generally are constrained by activities that have taken place before purchasing becomes involved in the procurement The very survival of the organization may be affected by the presence or absence of a viable strategic material plan Under the myopic approach of traditional reactive purchasing, the company may awaken one day to a world in which sources of supply capable of... be suitable alternatives to machined metal knobs, at a savings of 85% Market share, prices, and profits are all favorably affected by attention to quality Today, quality and reduced time to market have replaced price as the key to increased market share and profit margins Procuring the right quality materials frequently is the quickest and easiest way to improve the quality of the final product Procuring... be a better way Extreme? Perhaps Perhaps not All managers have experienced many of Ted's problems There is a way of avoiding most of them, and, in turn helping the purchasing department to make a greater contribution to profitability That way is proactive procurement And you can and should be responsible for making it happen Total quality management (TQM), just-in-time (JIT) manufacturing, simultaneous... requirements are fully occupied supplying the company's competitors and are unavailable Proactive procurement includes strategic supply management as a key responsibility and, as discussed in Chapter 15, helps to avoid such situations 9/7/2006 9:34 AM Page 7 Materials Selection The implementation of an integrated proactive approach to procurement can significantly affect productivity For example, many of... alloy under consideration The zinc alloy cost half the price of the tin-bronze alternative 2 Another manufacturer found that a synthetic insulation material was far superior to asbestos in the production of high-temperature hose lines The synthetic material cost one third as much as the asbestos and avoided the latter's hazards 3 An appliance manufacturer found molded plastic knobs to be suitable alternatives... once this cooperation is achieved, it must be maintained-one of a proactive purchasing manager's most important responsibilities Five Approaches to Doubling Profits Virtually all managers want to improve their organizations' performance For profit-making organizations, profits are a key indicator of performance For gov- 9/7/2006 9:34 AM Page 10 ernment and other not-for-profit organizations, budgets... Procuring the right quality materials is far more likely to occur when a firm uses a proactive approach to procurement than the traditional reactive approach A recent famous case of unilateral purchasing decision making involved the enormous price pressure by Ignacio Lopez, GM's former corporate purchasing chief Lopez restored a focus on low price versus total cost at GM with, according to Business Week,... key to greatly improved profits, productivity, and product quality Although written for the purchasing manager, A Purchusing Managers Guide to Strategic Proactive Procurement has considerable relevance for top management The understanding and support of senior management will greatly facilitate implementation of the recommended improvements This book outlines and discusses the steps required to gain ... concept to customer delivery times, and strengthening the integration of materials management into the total operations of an organization A Purchasing Managers Guide to Strategic Proactive Procurement. .. manager, A Purchusing Managers Guide to Strategic Proactive Procurement has considerable relevance for top management The understanding and support of senior management will greatly facilitate... right quality materials is far more likely to occur when a firm uses a proactive approach to procurement than the traditional reactive approach A recent famous case of unilateral purchasing decision