Daily Archives: June 27, 2006

Purchase Automation

Today we are going to talk about purchase automation and review how it helped Fluor Hanford transform their sourcing organization, as described in the article “Empowering End Users” in the latest issue of Inside Supply Management.

Fluor Hanford developed a tool that, among other benefits,

  • provided visibility on existing material inventory levels throughout the company,
  • reduced transactional involvement,
  • took greater advantage of the cost and process savings offered by the purchase card system, and
  • drove additional price reduction through supplier integration.

This allowed the organization to reduce redundant buying by about $300,000 in a twelve month period, the average per transaction cost by 68% (to $34 from $106), and convert all sourcing areas to an Electronic Commerce Agreement.

As we discussed last Wednesday, the ultimate innovation in procurement evolution is the purchase order free supply chain, but just like you can’t go from zero to sixty in a sports car, you can’t go from no automation to no purchase orders in a single step, it’s a process, and the real innovation is in continuous process improvement, with streamlined automation the best practice first step.