Improving purchasing request for quotation process

Abstract

Purchasing is one important function for the company’s business. It is responsible of among other things purchasing goods for the company, managing the suppliers, and following the current market situations. Efficient purchasing function has many benefits but despite that often the function is not optimized. Therefore, it is relevant to consider how the function could be improved. One important process that could be improved in the purchasing is the purchasing request for quotation (RFQ) process which is used to inquire purchasing information such as price and delivery time from the suppliers. In this study the aim was to improve the purchasing RFQ process in a global manufacturing company by shortening the process lead time. The internal customers of the case company’s RFQ process were not satisfied in the process lead time and therefore the main goal of the study was to reduce the process lead time. The tool utilized in the process improvement was Lean methodology which was selected since it has been widely utilized in different process improvements and in reducing process lead times. Lean emphasizes the importance of identifying the customer value in the process and as a result customer centricity was emphasized in this process improvement. The study is divided into a literature review and an empirical part. In the literature review the theory background of purchasing and Lean methodology is investigated. The aim was to collect information from the existing literature to support improving the process and to compare the results of this study to the literature. As the study focused specifically on a purchasing RFQ process in a purchasing team within a company, the empirical part of the study was conducted as a case study. The aim was to investigate the current state of the RFQ process in the case company, recognize the customer requirements for the process, identify the challenges in the process and address the root causes of the challenges with improvement proposals. The research process followed the DMAIC framework adapted from Lean methodology. The data collection of the current state of the process was conducted by interviewing 7 people from the case company. In addition to that, a workshop was held to analyse the root causes of the challenges and to come up with improvement proposals for the challenges. The study suggests that by utilizing Lean methodology to improve purchasing RFQ process, a company can recognize customer requirements towards the process, identify the challenges in the process and come up with improvement proposals to address the identified challenges. The findings of the study were that the case company could improve the purchasing RFQ process in a way that the process lead time could be shortened by addressing six identified improvement areas. Those were enhancing communication and collaboration with different process stakeholders, identifying relevant data and information, transferring RFQs into more strategic direction, investigating supportive information systems, clarificating processes and establishing key performance indicators (KPIs). Additionally, the study contributes to the existing literature by identifying themes from the literature that are applicable also in the RFQ process context, by proposing improvement areas that could be considered in other process improvements as well, presenting one approach for RFQ process improvement in customer centric way and by describing the RFQ process more in depth.