My Books link:
Painting a Leader’s Vision or Dream - Lean Six Sigma Success
good leader always paints and explains their vision very well.
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.
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.
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.
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.
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
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.