Lean Six Sigma applied to procurement

DMAIC is the five-phase improvement cycle used in Six Sigma: define the problem and what success looks like, measure current performance, analyze where the variation and waste originate, improve the process based on that analysis, and control the result so it holds. Its value in procurement is the ordering. Most purchasing improvement efforts begin at improve, changing something before establishing a baseline, which means nobody can later demonstrate whether the change worked or simply moved the problem elsewhere.

A defect is any transaction requiring rework or producing an outcome other than the one intended. In purchasing that means orders returned for missing information, invoices that fail to match, deliveries short or incorrect against the order, duplicate purchase orders, purchases made outside the approved process, and payments needing correction. Defining these explicitly is the step that makes the methodology usable, because it converts a general sense that the process is inefficient into a countable rate you can track from period to period.

Because it tests the whole process in a single measure. A three-way match succeeds only if the purchase order was accurate, the goods received matched what was ordered, and the invoice agreed with both. A failure anywhere upstream surfaces there. Tracking the proportion of approved purchase orders that reconcile without rework or discrepancy therefore gives a defect rate covering ordering, receiving and invoicing together. Achieving a low rework rate is difficult without technology providing visibility at each step, which is usually the finding the measurement produces.