Category: Supply Chain Management

Date: 20/09/2022

Subject: How to get quick ‘Time to Value’ by automating High Volume / Low-Risk / Low Cost goods purchases.

Audience: LinkedIn

Topic: Low-cost, Low-risk purchases generate 80% of the purchasing transactions but only make up 20% of the total purchasing spend in most Enterprise situations.

These low risk transactions add a significant overhead burden to the folk in the field or on the shop floor; and in most cases is a major contributor to the low industry standard for ‘Wrench Time’, where working staff spend less than 4 hours daily on the direct execution of work.

With Repair and Maintenance costs increasing by 10 – 15% yearly, every Direct Purchase Order now costs ~$50 or more; with the right type of automation this can be reduced to 50c per purchase order.

Couple Supply and Freight delays (currently the norm) to this equation and we need to re-think and re-energise this transaction heavy situation.

The Kraljic model helps us understand how product items are classified in terms of Supply Risk, Cost and Business Impact and why we should find better and more efficient and effective ways of managing the non-essential items; especially in large organisations where these high volume transactions continue to add up.

It’s time to allow procurement professionals to concentrate their attention on high-risk / high-cost / critical acquisitions and help lead the change for non-critical items across the Enterprise.

For more information on Diriger’s Automation, read our Insight at: Automating High-Volume Low-Risk Low-Cost