The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters. 

Key Idea

December 14, 2000

One of the most costly and error prone activities in any function is the re-keying of data and information. Each time someone has to re-type part numbers, descriptions, product data, order information, invoice information, etc. it requires direct labor, takes time, uses expensive equipment and opens the door to errors which require time to locate and resolve. This process costs a lot and is a major cost saving opportunity.

When looking to electrify the supply chain; trace data and information. Locate every place that the same data has to be re-keyed into a computer.  These are cost savings waiting to happen. If the data can be transferred electronically, then an immediate reduction in supply chain cost will accrue directly to the bottom line. Even if the direct labor savings (it's only a clerk) is minor, think about the long-term avoidance of errors.

Don't confine the search for data-entry savings to just the purchase order activity. Think about the seller's sales order, manufacturer's packing list, freight bills, bill of materials, production plans, labor reporting, etc..  Find where the data is first entered, grab it and share it electronically.

The best person to enter the information into the computer is the one who knows the most about the data. That person is the least likely to misunderstand and most able to see a mistake. Example: the engineer who needs a pump knows that he didn't mean 1 dozen. The buyer knows the shipping address isn't Portland, Maine. Use an electronic version of the engineer's description add the buyer's  shipping information, give it to the vendor to add his sales information and then the shipping department will have the correct information when shipping the product. 

New web-based ordering and data systems make this process very doable today! 

Extra Credit:  Don't forget the back end of the supply chain. Get electronic part lists that you can share on your Intranet. Give maintenance people full-time access to correct part numbers and descriptions that can be copied electronically into requisitions. Give marketing people good descriptions of components that they can send to customers. Get electronic copies of invoices, certifications, warranties and anything else that needs to be shared, reviewed or saved. Share them all via web-based tools and write record copies to CD-ROMs.

Mike Taylor is the owner of  and presents seminars and programs on purchasing topics.

MLTWEB is assembled and maintained by Michael L. Taylor, C.P.M. 
Materials and articles prepared by Mike may be shared for purchasing education provided that this source is cited and no fee is charged. The rights for any other use are withheld.
Copyright;  Michael L. Taylor, C.P.M.
Last Updated: 11/26/2016