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Management Side
Week of 3 June 2024: Qualifications for Procurement

Email Jim at jim.thompson@ipulpmedia.com

This is simple and in this order:

  1. Honest
  2. Ethical
  3. Understanding of the legal aspects of procurement
  4. Knowledge of the use and need (including schedule) for all items procured

Procurement officers with these attributes are worth their weight in gold.

If you can't have but one of the four, seek honesty. Dishonest procurement folks have cost companies millions of dollars--this year, at one site. I guarantee it. How do you audit honesty? Have more than one person involved in each purchasing transaction and rotate these people so that two people don't become buddies that collude. With several purchasing sites for similar items, you can set up a round robin purchasing exercise that keeps everything transparent.

If you can have two, add ethics. Some purchasing agents think they are sharp when they bleed the supplier for everything and on top of that, demand 120-day terms. Procurement offices that do these things develop a reputation and suppliers will find a way to get this back. Squeezing the suppliers for every last drop will cost you.

Of course, someone in the procurement office must understand the legal aspects of procurement at a local, state, federal and international level. In large corporations this can be a centralized function.

Then there is the knowledge of the use and need (including schedule) for all items procured. Don't forget this:

The value of an item is not its cost of procurement and shipment to your facility. The value of an item is the value of the amount of downtime that will be incurred if that item is not received in a timely manner.

Here are some items whose cost is relatively low, but which can create monstrous amounts of downtime.

Needle valves, doctor blades, belts, couplings, steam valves, electrical breakers and on and on. Felts and wires can fall in this category if you have done a poor job of inventory management.

Over time, procurement offices should develop a feel for what items are needed quickly.

My opinion is that in a modern mill, procurement competency can swing profitability by several million dollars each year. Procurement chicanery can build practices into a mill that take years to root out.

Procurement is serious business.

Be safe and we will talk next week.

________

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