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Painting a Leader’s Vision or Dream - Lean Six Sigma Success

A good leader always paints and explains their vision very well.

When I took over as head of a procurement division for an integrated paper company, there were three plants with over $500 million in purchases per year. I was to transform Purchasing into Supply Management with some Lean Six Sigma tools. Plant senior management, who were not supportive, decided to downsize my department at the plant where I was located from eight to four employees, starting from day one. The plant manager was not committed to the transformation attempt and actually wanted it to fail. I decided to do everything in my power to disappoint him and be a success.

At the first meeting I had with the department team, two people actually started to cry. They just didn’t know how they were going to keep up with the work. This showed me that they were conscientious enough to care and feared being overwhelmed. I pledged that within six months, they would have so much spare time; they would be coming to me, asking me to give them a project to work on to move the business ahead. They all suddenly burst out laughing at my statement either out of nervousness, fear or what they felt was a preposterous statement. I was not sure what emotions were driving the laughter but I resolved to make it happen.

I volunteered to take over buying of one of the major com­ponents in the plant. Of course, I had no idea about the workload involved in the buying process. The next day, four file drawers of paperwork for the component were moved into my office. I rolled up my sleeves spent a week creating a database to help me manage the com­ponent, which had no previous reliable information. Eventually a supplier helped me improve the database and dramatically streamline the ordering process. I then sat down with the team and explained what happened and restated my vision to dramatically reduce their non-value adding work.

I soon found out that purchasing data was scarce or non­existent. The current purchasing employees could not give me any good sum­mary statistics and were so caught up in firefighting, transaction chasing and expediting, that confusion reigned supreme. No one could adequately explain the purchase-order process (the as-is process). There were no standard operating procedures. Undaunted, I rolled up my sleeves and typed purchase orders myself just to get an idea of what happened. Their previous boss had shown no such interest in the actual day-to-day work. As a team did a process map of the purchase-order process. We locked the doors to the department while we had process-mapping meetings.

Then we all went on a data expedition, and since I knew some computer programming and could query from the company data­bases, we started to compile our data. We discovered that we had approximately forty thousand transactions or buys per year. By using a Pareto chart, we saw that over 80 % of the purchase orders were under $200. The majority of our purchases were small-dollar items. Additionally, only about twenty people made about 90% of these buys. They were our super-users or power req­uisitioners. We decided to concentrate on them and educate them about our efforts to transform the entire process. We designed a short-order purchase form for purchases under $1,000 that they could use. They participated in the design of the form. No inter­face with purchasing was required for the form. The middleman (purchasing) was eliminated. The only catch was they had to buy from a list of our preferred suppliers. If they wanted to deviate from the list, they needed to get our approval. The team started to see the potential of my vision and the approach and enthusiasm and confidence grew.

We did a new process map for the short-order form with the super-users participating. We created a manual and SOP for the super-users that included the preferred supplier list, contact information, and basic purchasing terms and rules. We posted a process flow map in the department for everyone to see.

The result was our workload was drastically reduced, and the buyers didn’t have to worry about these small purchase orders. Our suppliers remarked that the error rate on these short orders was greatly reduced. We recognized super-users who had error-free months, and who worked well with suppliers. We eventually switched to purchase credit cards for these twenty superusers, which practically eliminated all paperwork.

Finally, we had time for supplier rationalization or reduction-and-strategic initiatives. Again, we mined the data and found out that we had over 20,000 suppliers. With hard work and consolidation of buys, we got that number down to 209. We set up new preferred suppliers and greatly simplified the entire process from requisition to payment. We standardized payment terms, which greatly relieved accounts-payable’s workload— they instantly became our allies.

In four months (not six), my employees had the confidence and trust in me to come to my office and admit that they had nothing to do that day, and asked what projects could they work on to move the business ahead. Most of this progress was due to using some simple Lean Six Sigma process improvement tools. The key element was articulating the vision well, reinforcing the vision with success and never giving up on the dream.

The best part was that corporate gave us an award for the best purchasing department for the year. The vice president of purchasing with the plant manager present, presented it to us in front of the entire plant.

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