Purchasing at Midwestern State University Jane Polski, the newly hired director of university purchasing, took one final
Posted: Mon Jun 06, 2022 7:08 am
Purchasing at Midwestern State University
Jane Polski, the newly hired director of university purchasing,
took one final look at the report from her purchasing manager,
removed her glasses, and rubbed the bridge of her nose. Surely, she
thought, things could not be that bad. According to the report,
which she had commissioned, the centralized ordering process at
Midwestern State University was simply “out of control.” Various
academic departments that placed orders through the purchasing
system had complained that orders were often lost. Furthermore, the
amount of time that it took for an order to be filled was difficult
to predict. For example, the chemistry department had placed an
order for two identical mass spectrometers, separated by three
weeks. The first one took two weeks to arrive; seven months later
the second order was still unfilled. Orders were often incorrectly
entered. When this occurred, if the ordering department did not
want to accept the incorrect order and if the item could not be
returned (something that often happened because the items ordered
were unique), the purchasing department was obligated to assume
responsibility for the ordering error. A separate budget category
had been set up for this problem (last year, it accounted for over
10 percent of total costs). Once a year, the purchasing department
sold off all the mis ordered item often at a significant loss.
Finally, university personnel complained that, when they called the
purchasing department to identify the status of an order, no one
seemed to know how to locate it. This was bad, and Jane knew that
she had to do something—that was one reason that she was hired—to
significantly improve operations within the purchasing department.
Midwestern University had grown tremendously in the number of
programs it offered. It had been decided some 40 years ago to
centralize purchasing activities in one department (previously,
each unit managed its own purchases). The reason for this decision
was to reduce costs and improve operating and acquisition
efficiencies. The current department was staffed by some 40 buyers,
planners, and clerks. Most of these people had little or no prior
professional purchasing experience. Furthermore, many had little
more than a high school education. Most of them saw their jobs as
consisting mainly of simply placing orders. With the growth in
technology and the rapid changes taking place in academic research,
placing orders efficiently was becoming more difficult. Systems
that had worked before were not working well now. Jane had
commissioned a series of purchasing team meetings aimed at
identifying areas of possible improvement. As she reviewed the
report, she noted the following issues uncovered by the team:
• The department had more than 6,000 different forms. Many of
the forms were developed by individual buyers for their own
uses.
• The forms were difficult to complete since critical terms were
often undefined and were thus interpreted in different ways.
• Except for notification of when the orders were filled, there
was little contact with the customers once the request for an order
was submitted.
• Department performance was evaluated in terms of utilization
and cost—the percentage of the staff time devoted to receiving and
processing orders.
• Every buyer processed orders differently. For example, one
buyer tended to place all orders on the last day of the week, while
another worked on each order to completion as soon as it
arrived.
• Orders were typically worked on in the order received without
any consideration of urgency or importance. There were other
issues, but Jane knew that she had enough to start devising a plan
for change. The question was, where to start?
Questions
Jane is considering the application of lean services in this
department. To help her, she needs the following questions
addressed:
1. What should the desired outcome (objective) for this
department be? How does the purchasing department create value?
2. Purchasing personnel feel that since Midwestern State
University is a public, rather than private, institution, they
really do not deal with customers. What is your assessment of this
view? Why?
3. What measures should be used to evaluate the performance of
this department?
4. Evaluate the suitability of lean services in this
department.
5. What lean tools and procedures would you suggest Jane
introduce into this department? Why?
Jane Polski, the newly hired director of university purchasing,
took one final look at the report from her purchasing manager,
removed her glasses, and rubbed the bridge of her nose. Surely, she
thought, things could not be that bad. According to the report,
which she had commissioned, the centralized ordering process at
Midwestern State University was simply “out of control.” Various
academic departments that placed orders through the purchasing
system had complained that orders were often lost. Furthermore, the
amount of time that it took for an order to be filled was difficult
to predict. For example, the chemistry department had placed an
order for two identical mass spectrometers, separated by three
weeks. The first one took two weeks to arrive; seven months later
the second order was still unfilled. Orders were often incorrectly
entered. When this occurred, if the ordering department did not
want to accept the incorrect order and if the item could not be
returned (something that often happened because the items ordered
were unique), the purchasing department was obligated to assume
responsibility for the ordering error. A separate budget category
had been set up for this problem (last year, it accounted for over
10 percent of total costs). Once a year, the purchasing department
sold off all the mis ordered item often at a significant loss.
Finally, university personnel complained that, when they called the
purchasing department to identify the status of an order, no one
seemed to know how to locate it. This was bad, and Jane knew that
she had to do something—that was one reason that she was hired—to
significantly improve operations within the purchasing department.
Midwestern University had grown tremendously in the number of
programs it offered. It had been decided some 40 years ago to
centralize purchasing activities in one department (previously,
each unit managed its own purchases). The reason for this decision
was to reduce costs and improve operating and acquisition
efficiencies. The current department was staffed by some 40 buyers,
planners, and clerks. Most of these people had little or no prior
professional purchasing experience. Furthermore, many had little
more than a high school education. Most of them saw their jobs as
consisting mainly of simply placing orders. With the growth in
technology and the rapid changes taking place in academic research,
placing orders efficiently was becoming more difficult. Systems
that had worked before were not working well now. Jane had
commissioned a series of purchasing team meetings aimed at
identifying areas of possible improvement. As she reviewed the
report, she noted the following issues uncovered by the team:
• The department had more than 6,000 different forms. Many of
the forms were developed by individual buyers for their own
uses.
• The forms were difficult to complete since critical terms were
often undefined and were thus interpreted in different ways.
• Except for notification of when the orders were filled, there
was little contact with the customers once the request for an order
was submitted.
• Department performance was evaluated in terms of utilization
and cost—the percentage of the staff time devoted to receiving and
processing orders.
• Every buyer processed orders differently. For example, one
buyer tended to place all orders on the last day of the week, while
another worked on each order to completion as soon as it
arrived.
• Orders were typically worked on in the order received without
any consideration of urgency or importance. There were other
issues, but Jane knew that she had enough to start devising a plan
for change. The question was, where to start?
Questions
Jane is considering the application of lean services in this
department. To help her, she needs the following questions
addressed:
1. What should the desired outcome (objective) for this
department be? How does the purchasing department create value?
2. Purchasing personnel feel that since Midwestern State
University is a public, rather than private, institution, they
really do not deal with customers. What is your assessment of this
view? Why?
3. What measures should be used to evaluate the performance of
this department?
4. Evaluate the suitability of lean services in this
department.
5. What lean tools and procedures would you suggest Jane
introduce into this department? Why?