The idea of reducing costs for a particular product by improving its quality and, therefore, spending more on the raw materials so that the production process outcomes could be deemed as improved compared to the previous record is not new. However, in her article regarding the opportunity of saving an impressive amount of money by reducing the amount of waste retrieved in the production process, Jacobsen (2009) goes even further, stating that the reconsideration of the purchasing process is required to attain the ultimate success in the course of the saving process. As a manager, one will have to adopt the 7M tools such as prioritization matrices, interrelationship diagrams, and Process Decision Program Charts (PDPC).
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The redesign of the purchasing process, which, as Jacobsen (2009) has proven to have a tremendous effect on the number of expenses taken in the production process, needs to be reorganized so that a more sustainable approach could be introduced into the firm’s framework. For these purposes, one will have to consider the tools that will display the link between different processes in the organization. Interrelationship diagrams, which are designed to demonstrate the connection between the above processes, will help extensively as they will purportedly serve as the means of identifying the links between the production process, the logistics-related activities, and the customer relations issues. Showing how a drop in costs for completing one of the stages will result in the increase of funds for the other ones, the matrices can and should be used by the manager so that the possible avenues for saving more resources could be identified (Pyzdek, 2014).
More importantly, the tools that will help prioritize the goals of the entrepreneurship and the further course of actions to be taken need to be viewed as an essential element of creating a more sustainable purchasing policy. The connection between the two concepts might not be obvious at first. However, a closer look at the subject matter will show that the reduction in the amount of raw material should be preceded by a careful analysis of the company’s objectives, the target number of customers, whose needs it is going to cater to, and the quality of the equipment that the organization has in its possession at present. For instance, saving on the number of items bought for the production process is rather pointless if the faults in the equipment lead to losing a certain percentage of raw materials.
The process of saving an extensive amount of money during the purchasing process and, therefore, reducing waste significantly, can be carried out by implementing the 7M tools such as prioritization matrices, interrelationship diagrams, and Process Decision Program Charts (PDPC). By deploying the above techniques in the context of entrepreneurship, one is likely to create a lean strategy that will help rearrange the current concept of resource usage. For instance, the diagrams and charts will help prioritize the essential corporate processes, shedding light on the number of resources that each will require. The interrelationship diagrams, in their turn, will show the correlation between the processes and the possible expenditures that may occur. As a result, the company will require a significantly smaller amount of resources for purchasing the raw materials, and a more sensible approach to managing resources will be introduced into the firm’s framework. Consequently, the company’s revenues can be increased greatly.
Jacobsen, J. (2009). Optimizing purchasing processes saves $1 million. Web.
Pyzdek, T. (2014). The define phase. In The Six Sigma handbook (6th ed.) (pp. 245-270). New York, NY: McGraw-Hill Education.