3bJust In Time at a Bank as PDF

3bJust In Time at a Bank as PDF - no 9110139ch& BUSINESS...

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Unformatted text preview: no; 9110139ch & BUSINESS SYSTEMS s 3 E _ . Rain Meyer: «dim: manager-for mailman ' mmymi. (Handing! oversees the ramming ' 0mm at Harris Bunk. L l Shown with him an Jim '» Martens. and Rut); Arm Mmu. ,... ‘\ Does just-in-time have ' a place in a bank? Jim Martens at Harris Bank thinks so. In fact he’s using JIT principles to cut back office supplies inventories Winks .‘V V he purchasing unit at Chica— Tgo’s Harris Bank has bor- r rowed a management tech— nique usually linked with manufacturing and it’s paying divi- ‘ dends. A customized form of, just~in-time inventory control through an agree- ment with a supplier for daily deliv- eries of office products is effectively reducing inventory, making the bank’s buying operation more pro‘ ductive, and giving users a wider choice of supplies. In July, 1986, Chicago's third 1% ruxansme MAYZLlslN By Shirley (layer / Correspondent largest bank entered into the busi- ness agreement ’with a major suppli~ er and is now enjoying the added benefit of a more balanced cash flow 1 to the monthly billings. ,- e arrangement accounts for less than a quarter of the $1.6-mil- lion Harris spends on office sup- plies, and that. in turn. is a small fractiori of the 33213591300 it spends through purchasing, but the concept is indicative of the department’s ef~ forts to maximize efficiency. Jim Martens. purchasing unit su« pervisor, says the deal took four M- v...»— u ‘22-" a; months to Aher but was. wfifih every minute. '3 “We looked at several suppliers and chose the one with the biggest: inventory and the best service,” he says. It also offered next-day delivi ery that Martens adds "is as fast as we used to get from our own stock. room.” which is located just a few blocks away. _ 1! Orders are sent by facsimile ma- chine directly to the supplier, lo cated in a suburb about 30 mile: away. “We cut off orders at about? pm for next~day deliveries,” Man Ii ‘4 M tens says. "But if we need some- thing in a burly, we can still call in an order by telephone." by-passing the computerized requisition sys- tem. “The amount of time the office- supplies buyer used to spend on I requisitions has been cut by a third," says Martens. “She can now get her work done in a day instead of taking it home evenings." Users too are happy with the ar- rangement because their choice of office products is wider than before. “We weren’t able to keep such a variety of products stocked in our warehouse," explains Martens. Still users don’t have carte blanche. “The vendor helped us by modifying its catalog so we can limit the number and types of products our users could buy.” One of the attractive features of the arrangement is a more balanced cash flow for the bank. “We are billed once a month for a lot of little orders rather than making periodic large payments to shore Up our in- ventories. And with daily delivery, we are getting use of items even 5 before we pay for them." But the ‘ bank doesn’t forfeit large volume discounts in exchange; the supplier . reviews prices quarterly and offers {reduced costs based on quantity ’. purchasing, Martens adds. ; The arrangement with the office— ;supply vendor is just one of the ways Harris approaches purchasing imaginatively. In the area of what the bank considers its raw material -—forms-—-Harris is no less innova- tive. " “Forms are 90% of the stuck we carry,” explains Russ Meyer, sec- tion manager for materials manage- ment. Meyer is responsible for in- entory, forms management, and urchasing. Total expenditure last ar on forms and stationery ached $2.8—miliion, not the bank’s est buy in terms of dollars, but eyer explains that those numbers n’t tell the whole story. “We have different forms, which are part a $1.5<million inventory that 3 every six months.” Turnover d to be once a year. Harris uses a computerized track- system marketed by Manage- t Science of America in Atlanta that gives automatic notication when levels of inventories are near depletion. with adequate leadtimes built in. f “If it's a critical form, such as the customers’ monthly statements. we keep extras in stock." Meyer says. But in the area. of forms, another factor affects the purchasing system: obsolescence. The con~ stant movement of forms is cou- pled with a continued upgrading and consolidating, he adds. “The challenge is in balancing the quantity We buy with obsolescence. Is it better to order 50,000 four times a year to ward off a loss through obsolescence or order 200,000 once a year to save with economy of scale? The answer—and the art—lie in the timing and the ability to dovetail diminishing sup- ply with expected obsolescence.” Changes in forms are only made with the full approval of the users. it is the forms manager‘s job, how- ever, to work with users to stream— line the system—to consolidate the use of forms by making them more universally appropriate across the various bank departments. The goal Keeping up with what’s out there is just part of the challenge — is to reduce the number of different forms and take advantage of high order quantities while maintaining efficiency. It’s as easy to run 10,000 as it is 2000 once the presses are rolling. ' Harris’ purchasing department also strives for agreements with printers to supply portions of orders at regular intervals. This holds down the unit cost for the bank and allows more flexibility in its ware— house. Harris maintains its own print shop as well as works with a dozen other printers. Purchasing at Harris Bank is guided by Ruth Ann Francis. vice- president of materials management. Forms supervisor Wally Olson, in- ventory control supervisor Dick Be— galka, and stockroom supervisor Ray Rizzo report to section manag- er Russ Meyer. Four buyers, who handled 6600 1’05 and 24,000 requi- sitions last year, are supervised by Jim Martens. Lois Samson pur— chases office supplies and Art Solo— mon is the forms buyer. Karen Gold— enstern who was responsible for furnishings and MRO until last year, and spent $11,400,000 in ’86, now buys just furnishings. Ray Krasnozon has taken over the MRO buy. Mary Hogan’s realm is office machines, which include mainframe and personal computers, check pro- tectors and signers, coin sorters, and microfilm and microfiche, as well as maintenance on all equip- ment. Last year’s expenditure for office machines was $11,600,000. About 100 of those orders are for personal computers. Harris’ pur- chasing unit works in tandem with the bank’s technical experts when purchasing computer systems, Mar— tens says. "The technical planners are the experts in hardware and software,” he adds. “We handle the vendor negotiations.” In other office equipment, the purchasing unit regularly reviews the available technology and sets standards. When the standard is set, the buys are easy, Martens, says, and offers as an example how the bank switched from using elec- tric typewriters to using electronic typewriters. .“Three or four years ago, we looked at the developing technology and researched the companies which offered electronic typewrit~ ers. We entered into an agreement with the company that we thought had the best technology at that time. The bank standard was set and then our job was to sell the user." Now Martens says he's seen a change in technological leadership. “Other companies have jumped into the market and we’re looking at what everyone has to offer again.” Keeping up with what’s "out there" is just part of the challenge. Another is finding out what Harris Bank’s 4000 employees need so they can be more productive. That’s where vicespresident of materials management Francis has taken the PURCHASING MAYZl. 1987 57 initiative. She’s meeting with divi- 1 sion administrators and managers to assess their needs and learn how purchasing can do a better job for them. Efficiency may be the obvious - goal, but the action helps build con— - ' fidence in purchasing’s role at the L bank. “Sixteen years ago we had one buyer," Martens says. The bank has - ‘ grown and so have the problems. Martens’ job is to focus in on the A problem areas, to set new policies and procedures for the smoother : operation of the bank. ' - A goal for 1987 is to set up ince'n- tives for top vendors. First, says Martens, the bank will explain its standards of performance to ven- dors and look at their performance each quarter. Harris will then com- municate to them how they measure in terms of late and early shipments, quality, responsiveness, packaging and deliveries. Challenges facing Harris’ pur- chasing department have their lighter moments, too. The bank has a policy of presenting gifts to em- ployees after 25 years’ service and gives them the opportunity to order anything of lasting value within ai specified dollar limit. Some Harris‘ employees have proven to be as im- aginative as the purchasing depart- ment. “We’ve had requests for such items as a canoe and a shotgun," Martens says. "We’ve ordered Wa- terford crystal from Ireland, took a 1 photo of a recliner chair in lieu of lugging the furniture into the bank for the presentation ceremony, and set up a stereo system only to find we couldn’t get it back into the packing crates after the presenta- tion. Other times we’ve been hard- pressed to find a place on the gift to engrave the bank's message. That was the challenge when we pur- chased a one-of-a—kind, signed. an- tique vase. We finally went to a carpenter and had a special oak base made for it, duly inscribed.” But all that is just the fun stuff] that goes along with the job, he ' concludes. "We rotate that purchas— ing function so everyone has a chance to experience it." I V 58 PURCHASING MAY“. 1987 ...
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3bJust In Time at a Bank as PDF - no 9110139ch& BUSINESS...

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