Purchasing and Expediting — the True Facts
Mark S. Miller C.P.M., C.I.R.M.
Mark S. Miller C.P.M., C.I.R.M. Senior Director Purchasing, CNH, 700 State Street, Racine, WI 53404, 262-636-6565, Mark.firstname.lastname@example.org
Thomas M. Graddy, C.P.M., C.I.R.M
Thomas M. Graddy, C.P.M., C.I.R.M, Manager, Supply Chain Management, CNH, 700 State Street, Racine, WI 53404, 262-636-7975, Tom.email@example.com
86th Annual International Conference Proceedings - 2001
Abstract. Expediting is a function that is often associated with purchasing. The word expediting is derived from a Latin word meaning, "to free one caught by the foot". Merriam Webster's Collegiate Dictionary defines an expeditor as "one empowered to ensure prompt movement of goods or services in business". There is debate, however, whether the function of expediting is part of the buyer's job and how much the buyers should be involved. In the following we will examine:
- Three different organizational options for expediting
- Five key factors about expediting that every buyer should know.
Three organizational options for expediting.
- Expediting reports to Purchasing. Many organizations have the expediting function report to purchasing. The argument is that since purchasing is responsible for supplier performance and has the most clout, expediting should be a purchasing function.
As Fred K. Hielsberg, C.P.M., A.P.P. of Eaton Corporation explains, "The expediting function should be the responsibility of purchasing. Purchasing is required to maintain a close tie to how well the supplier is performing. Whether the buyer also performs the day to day expediting depends on the size of the organization. Bigger companies have full time expeditors versus small companies where the buyer does it all."
- Expediting reports to planning/ scheduling. Other companies have expediting reporting to the planning/scheduling group.
Frank Wolkenheim, C.P.M., A.P.P. of Bosch Automation Technology offers the following opinion regarding how the expediting function should be organized, "Purchasing should concentrate on strategic issues such as strategic sourcing, cost reduction and improving supplier performance. Expediting is a tactical function involving day to day issues. The expediting function should be part of the material control organization. There is still a need for frequent communications with the expediting/ planning groups to identify suppliers who are performing poorly."
- Expediting report to a third party supplier. Many companies have outsourced the expediting function to third party firms. The key question is whether expediting is a core competency that must be performed by company personnel. The expeditor generally needs less training than a buyer or scheduler, so this function is easier to outsource.
Some companies consider day to day expediting as a supplier responsibility. This often requires the supplier positioning supplier personnel in your office (JIT II). It is common for the in-house supplier personnel to perform functions such as planning, quality inspection, routing, as well as expediting.
There are several organizational options to handle expediting. The size and philosophy of your company will dictate the structure that fits best.
Five tips every buyer should know about expediting.
In a perfect world no expediting would be needed but in reality there are various errors that cause shortages including: poor inventory records, quality problems, inaccurate specifications, supplier capacity problems, poor forecasting, and lost orders. Regardless of the organizational structure for expediting within your company, the buyer must be aware of the basics of expediting. The following are five tips regarding expediting that every buyer should know.
- It's not always the supplier fault. We have all encountered suppliers who don't deliver on time, but many times the problem is not the suppliers. As Pogo said: "We have met the enemy and the enemy is us." Some common internal problems that can cause the need for expediting are:
- Poor inventory records
- Poor forecasting
- Frequent schedule change
When expediting, make sure you know who caused the problem. An overly aggressive, harsh approach, when the supplier was not at fault, can make the situation worse
- Hold regular follow-up meetings. Even though, the buyer isn't doing the day-to-day expediting, he must advised of the poor supplier delivery performance. Having the buyer attend weekly shortage meetings is a good method to keep advised of supplier problems.
- Be aware of the expediting basics. The buyer will often be responsible for training the expediters. These are the three basics of expediting every expediter should know:
- Be persistent — The best expediter is the one who bugs the heck out of the supplier. The best axiom for expediters is still: "The squeaky wheel, gets the grease". A good expediter gets all the details and is continually asking questions such as: Can you work overtime? How many can you make in an hour? What operation are the parts at? How many operations are left to complete? How many pieces will be done by two this afternoon? How many can you ship now? What is the bill of lading number of the shipment that just went out? How can we help? A good expediter will stay on the line until an acceptable answer is received. A persistent expediter calls each hour to find out how many parts have been completed.
- Go up the chain of command — The good expediter will go up the supplier's chain of command until he gets an acceptable answer. If the inside sales contact or the normal contact can't get an acceptable answer, contact his boss. Its amazing the miracles the president of the company can produce. You are the customer. Train your expediter to go up the supplier's chain of command to get your parts shipped.
- Look for other options — This is the area of expediting that requires the most experience and creativity. The good expediter must look for other options to relieve the shortage problem. Is there an alternative part that can be substituted? Can another supplier produce the part quicker? Are parts available from a distributor, dealer, another customer or from another division of the company? The buyer should be involved in this stage to look for other options to fulfill the requirement.
- If you don't measure it, you can't improve it. It is important to measure how your suppliers are doing, especially in regards to on-time delivery. There are many ways that delivery can be measured and these are some of the measurement decisions to be considered:
- Manual or mechanical tracking. This will depend on the number of transactions you process and your systems capabilities.
- What window to use. You need to decide what in what delivery window is acceptable.
- Short lead-time orders — Will short lead-time orders count in your delivery measurement?
- Ship date or receipt date — If you control the transportation, the best measure of supplier performance may be the suppliers ship date.
- Calculation method — There are many ways to calculate supplier delivery performance: pieces, dollars, orders, past due orders or number of shortages.
- Look beyond the fire fighting. Its the buyer's responsibility to look beyond the day-to-day fire fighting and make improvements to the process so the expediting will not be required next time. Look at the root causes of the shortage. If the root cause is an internal company problem, a process improvement team should be formed to make changes.
If the root cause of the error is the suppliers, the buyer should require a corrective action plan from the supplier. If the supplier doesn't improve then the buyer should investigate other alternatives.
Expediting is needed when there is an error in the process, either internally or externally. The ideal situation is to fix the process so day-to-day expediting is no longer required.
Conclusion — Expediting doesn't always report to purchasing and companies handle the responsibility differently. Regardless of where the expediting function reports remember these tips that every buyer should know:
- Review how expediting is positioned in your company.
- Determine if expediting is a core competency that should be performed in house.
- It's not always the supplier's fault.
- Have the buyer attend regular shortage meeting.
- Teach the expediters to be persistent.
- Go up the supplier's chain of command.
- Search for other options to cover the shortage.
- Define and measure supplier delivery performance.
- Look beyond the fire fighting and improve the process to eliminate the need for expediting
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