Process of the month – Purchasing Process

This is a new initiative I will try to keep some action. Most of the BPM blogs (like mine) talk a lot about trends, experience,  hype, methods, concepts, but do not discuss about HOW to improve a business process.

I wonder if the community would like to share some knowledge about it, because I feel that most of the people (the ones that execute it on across enterprises and are part of improvement teams) want o learn the tricks of process improvement.

I hope that this kind of post can enhance the capabilities, knowledge and tools, necessary to business process improvement because 99,99% of BPM books don’t talk about it.

For the start I bring a classical and understandable Purchasing process. The scope of this process, that is perfectly designed, is so broad that includes from buying assets to buying printer toners.

By the way this is not normative BPMN 2.0. Forget about the rules, because I never liked it.

The process is very straightforward to analyze.

One key things I want to stress is:

  • Process models became a formal description only. If you look to this flowchart where are the improvement opportunities? I can see very few ( the low hanging fruit of checking and cross checking the purchasing request). Most of the improvement opportunities cannot be discovered  on a process model. Why wasting to much time with such detail?

And now the quest: If you belong to a process improvement team what would you do to improve this nice looking process?

This process is full automated on SAP.

Purchasing Process Part I

Purchasing Process Part II

Purchasing Process Part III


5 thoughts on “Process of the month – Purchasing Process

  1. Hi Alberto.
    If I have to make an improvement to this process, I would leave Parts 2 and 3 as they are. Less interventions to processes that are working is sometimes the best intervention.
    In the Part 1of the process I would suggest to avoid duplicity in activities in the sense that R (Requester) prepares PR (Purchase Requisitions) and RFQ (Request For Quotations) and also make amends, not matter if amends are ordered by RM (Request Manager) or PA (Purchase Agent).
    If it will be so, RM has to check PRs and RFQs to approve reject or ask for amends. With these changes RM will be responsible for R works and act as a filter and also will be the person who sends RFQs to PA.

    • Fernando:

      Thanks for your comments and improvement ideas.

      Looking to the part III that you leave untouched, I would suggest to reduce that 20% dispute with the supplier.

      That would be possible if this ABC company have a true end to end process management commitment. Implementing SOA would enable that since the start, when the Purchase Order is sent and accepted by the supplier, will not change regarding the requirements attribute, specifications, quantity, price, payment terms… Thus in the end when releasing the suppliers invoice for payment it should be no errors and people would not waste time trying figuring out what’s wrong with the document. If we see from the suppliers perspective, if the customer (the ABC company) typically have funds to pay for the merchandise will contribute to prevent payment term to increase, and this last argument should led the supplier to change some of it’s internal processes also.

      One other improving opportunity: The financial manager should not release, authorize and pay the invoice, the payment should be done by other person.

  2. Hi Alberto,
    nice example. Here’s one aspect that springs to mind:
    In part II, the best option is selected for further processing. But what happens to the other offers? Do they stay in the system? It seems to me that the example is focussed entirely on the intended FINAL outcome (the sunshine case) and ignores outcomes and consequences that may occur along the way. As you know, this is something we check at the Process TestLab ( No real issues with the process itself (after a quick scroll through the model) but it seems incomplete in describing what is happening and what should be done during operations.


    • Hello Thomas, thanks for your contributions:

      We can look to this model in a number of ways, but the way it’s presented in this example it was on purpose. It does not shows a perspective of sunshine outcome. Why? Typically at this stage if all runs correctly the percentage of released purchase orders are bigger than the ones blocked, but … process teams neglect the other 5%, and this 5% (or 1%) can keep people busy resolving the issues with the supplier rather than do everyday job. Thus, should we investigate this 5% or not?

      If there is data or other evidence that shows that people take lots of time settling errors with suppliers, this 5% is a problem and must be addressed, despite the fact that has you said, in the beginning this looks like a super process, but in the this small slice can be a huge headache.

      Sometimes the sunshine is actually a thunderstorm.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s