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da "Outsourcing Journal"

These outsourcing relationships were nominated for the 2002 Editor's Choice Awards.
www.outsourcing-journal.com
Author Kathleen Goolsby, Senior Writer

The Tie to Optimizing Purchasing

Within the manufacturing industry, where companies must purchase a considerable number of components and various goods and materials, operational costs can skyrocket in the procurement arena. So can the number of vendors for those supplies.

MAN Roland, who manufactures an extensive range of newspaper and digital Web offset printing presses, had an objective to reduce expenditures of its purchasing department and also to optimize its supply chain. Optimizing, says Rudolf Kohlert, the company's purchasing director, meant reducing the number of vendors from which it purchased materials. They accomplished both objectives by outsourcing MAN Roland's purchasing process to Unitec.

Kohlert says Unitec, headquartered in Germany, reduced the number of small (under 50 Euro per year) vendors used by MAN Roland from 160 to just one -- Unitec. The service provider's Web-enabled NetSourcing services coordinates MAN Roland's orders for all vendors into one order form and has reduced invoices to just one per month -- thereby reducing the manufacturer's bookkeeping and processing costs.

Besides paperless purchasing, Unitec's eProcurement service includes order status tracking and options for urgent delivery. The Web site's database is comprised of more than 44,503 goods from 3,240 vendors, with multilingual descriptions.

In addition to the eProcurement services, Kohlert says MAN Roland selected Unitec as its outsourcing partner because of its expertise in C-parts management concepts and efficiency. The company's Activity-Based Costing Analysis defined "C-parts" as those worth five percent of the total purchasing volume but having a high rate on purchasing orders.

MAN Roland transitioned the work to Unitec over a two-month period, in phases per different purchasing departments and groups of goods. MAN Roland's return on investment was more than reduced costs; freed from administrative tasks, its purchasing staff was able to focus on more important activities.