Procurement process mapping is a method of identifying and visualizing all the steps involved in a procurement process. In manufacturing companies, it is a valuable tool for improving efficiency, reducing costs, and increasing overall performance.
One of the main benefits of procurement process mapping is that it allows companies to identify and eliminate bottlenecks in the procurement process. By mapping out the process, companies can see where delays are occurring and take steps to fix them. For example, a company may discover that a certain step in the process is taking longer than it should due to a lack of communication between departments. By addressing this issue, the company can reduce the overall lead time of the procurement process.
Procurement process mapping can also help companies to identify areas of potential cost reduction. By understanding the process in detail, companies can identify areas where they are overspending and take steps to reduce costs. For example, a company may discover that it is paying too much for a certain item because it is not taking advantage of volume discounts. By negotiating better terms with suppliers, the company can save money on this item.
In addition to cost savings, procurement process mapping can also lead to improved supplier relationships. By understanding the procurement process from the supplier's perspective, companies can identify areas where they can work more closely with suppliers to improve performance. For example, a company may discover that a supplier is having trouble meeting delivery deadlines because the company is not providing enough lead time. By working with the supplier to provide more lead time, the company can improve delivery performance.
According to the Deloitte report of 2020, procurement process mapping can lead to an average cost reduction of 10-15% and an average lead time reduction of 20-30%. Many companies have also reported increased supplier satisfaction and better communication with suppliers after implementing procurement process mapping.
For instance, General Electric (GE) implemented procurement process mapping in their manufacturing process and reported a 20% reduction in lead times and a 15% reduction in costs. Similarly, Boeing has been able to reduce their procurement lead times by 50% and costs by 15% by implementing procurement process mapping.
In conclusion, procurement process mapping is a powerful tool for manufacturing companies looking to improve efficiency, reduce costs, and increase overall performance. By identifying and eliminating bottlenecks in the procurement process, companies can reduce lead times and costs, and improve supplier relationships. Many companies have reported significant improvements in performance after implementing procurement process mapping, and it is clear that it is a valuable tool for any manufacturing company looking to optimize their operations.
FactWise S2P optimizes procurement for product manufacturing companies globally. The comprehensive, end-to-end platform provides transparency and insights to leaders, automates processes to improve efficiency, and drives bottom-line impact by unlocking savings potential.
