5 S for Procurement

Typically when you hear the term 5 S, it usually applies to warehouse housekeeping. The objective is to keep a neat, clutter free working environment. All tools and equipment have a home which is easily identified and located. 5 S derives from Japan and was developed as a technique that enabled just in time manufacturing. The Japanese words are: seiri, seiton, seiso, seiketsu, and shitsuke. Each action word starts with an “S” where the 5 S got its name.

•  Sorting (seiri) – sorting is the process of eliminating unnecessary equipment. Remove items that do not add value to your process.

•  Straightening or set in order (seiton) – define the workflow by arranging the necessary equipment in a ready to use fashion. This sets the tone for factory flow. Label your items so they are easy to find and put away.

•  Shine (seiso) – clean the work area and tools used. Keep everything tidy and clean. At the end of the shift, all tools and equipment go back to their homes.

•  Standardize (seiketsu) – schedule regular cleaning and daily maintenance. Create an inspection checklist to ensure the daily maintenance was performed properly at the end of each shift. This prevents accumulative items to build up over time.

•  Sustain (shitsuke) – commit to the discipline and maintain the standard. This is the most difficult step to achieve.

So, the big question is how would this apply to a Procurement department? Not many articles out there that can correlate the two so here is my stab at making it useful for our current processes.

•  Sort and Selecting – Identify key suppliers and determine which suppliers can provide us with the needed commodities and meet our material demands and expected delivery schedules at the lowest cost.

•  Straightening or Set In Order – Negotiate credit terms with suppliers and input their information in our MRP. Refer to the prior price quote that was obtained in the Sales Quote stage and attempt to achieve a consistent positive spread where bid for buys are lower unit costs then bid for bids. Then place orders based on negotiated pricing and expected delivery date.

•  Shine – Sweep your order book and close or resolve any old Purchase Orders and Debit Orders that has been open for an excessive amount of time. Keep your playbook clean, keep it shining.

•  Standardize – Schedule weekly meetings to review outstanding PO’s and follow up with suppliers for delivery dates on balance of open PO’s.

•  Sustain – With the use of operation metrics, measure and maintain supplier performance. Keep a scorecard on each supplier and reward the top performers with continued business.

For you Lean experts out there, I would be curious to hear your thoughts on how to 5 S a procurement department/process. Leave a comment with your insight.

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