Fundamental failings in Lean procurement
Management boards are failing to properly apply Lean principles to procurement due to a lack of understanding and organizational alignment. Many companies’ approaches to applying ‘Lean’ principles to their procurement operations are fundamentally flawed and misconceptions about the idea are rife, according to experts from a top industry consultancy.
Speaking exclusively to Supply Chain Digital, experts from Hitachi Consulting championed the use of Lean principles, most commonly associated with production and manufacturing, in procurement operations.
The famous Lean approach, adopted by companies all over the world, considers the expenditure of resources on anything that doesn’t create value for the end customer as waste and seeks to eliminate unnecessary processes within this framework.
The concern, however, is that companies are losing out by either not fully understanding the practice or not committing themselves enough to the change in thinking adopting it requires.
Cedric Parentelli (pictured, right), Vice President Supply Chain for Hitachi Consulting, said: “The problem goes to board level. Even in an organisation that has 60 percent spend on outside buying, often they don’t even place procurement in the hierarchy.
“In most countries – UK being an exception – procurement is seen as a low paid function. The positioning at board level is not really well understood and generally speaking is suffering from not being well positioned in most organisations.”