I interviewed Sharon (Neuman) Hartley who discussed Materials Management Transformation.
It’s nice to speak with you today, Rebecca. I’m looking forward to hearing your views today on materials management transformation. Before we start, can you provide a brief background of yourself?
Yes. I’ve been in the pollution-control industry for about ten years, in manufacturing and working as the sole agent for two separate pollution-control companies. This was back in the ’80s, when we had incineration. The first company I worked with had a very unique and patented machine that would use a conveyor system to put hazardous waste into an incinerator and combust it at a very high temperature and burn it to the ashes. Then we had an ash-silo system, the back end scooping out the ashes—and no human hands were touching it—and then it was taken on a conveyor belt and put into an ash silo, then taken to a land dump to dispose of the ashes.
That was the first pollution-control company I was at. The second one was at a company that was more of a chemical company. What they did is injected chemicals into boiler systems to help them burn hotter. The particulates were reduced for pollution. The EPA really enjoyed it; that particular company really excelled, where the other one had gone out of business because the EPA laws changed so dramatically.
The past ten years, I’ve been doing consulting work. I became a CPM, which is a certified purchasing manager, and it’s a very high and significant designation to have here in America. I went in and went through a whole bunch of different industries, using all the knowledge I had about strategic management and basically cleaning up all their practices and negotiating new contracts and putting systems into place to optimize their resources.
Thanks. Can you talk about the topic of materials management transformation? What are process improvements?
Process improvements, how we review it, we gather a lot of information in the beginning, and that’s basically looking at their whole process from the supply chain; the beginning of a customer order all the way to when the customer receives the order. We look at each step, and we look at their policies and what they say they’re doing and the procedures, and then we see if we can cut steps that might be unnecessary to their process or causing more issues for them than they realize.
We simplify their process, streamline it, and then it cuts down the number of man hours, so it sometimes eliminates personnel, and they can be put to more efficient means and given different kinds of jobs. With all the machinery and automation there is now, a lot of times we can put things that need an actual human’s hands in a different area as compared to the automation, need more programmers, and that kind of thing.
Can you talk about how process improvements can help?
As you go through each one, you’re streamlining their practices. Basically, for instance, if you had all these different office orders going out and you thought you had the supply for everything there and you didn’t. Every time you place an order, you’ve got several people’s hands involved in this. You’ve got the person who’s placing the order, you’ve got the person who is having to receive the order, you have the person who has to pay for the order; you have all these different people’s hands involved in things.
When you automate a process, you’re going to first have someone like me find out what the usage levels are; then you’re going to standardize it to say, “Oh, hey, you guys all agree on this particular pen that I could negotiate on?” and then we can leverage ourselves with more to negotiate with. Now, instead of all these pens all over the place, I’ve got these many pens just on this particular brand that do an efficient job. Now I can go to the office supplier and say, “Hey, look at how much we have, one million dollars’ worth of these types of pens. What kind of deal can you break for me on this?” Then, instead of having all these different pens and everything different, we can standardize that one thing, leverage it, then reduce the cost dramatically, and also use their network, their warehouse, resources to automate the process. We can order online instead of having someone place the order, then have the receiving department receive it, da, da, da, da.
You can basically just place one order and then have them receive it directly and then have them approve it so accounting doesn’t have to run all over the place and then pay for it just at the end of the month instead of, “Oh, I’ve got one here, one there, one there,” so at the end of the month, we have one monthly bill. That’s what’s really important: think about it in a bigger way instead of, “Oh, I’ve got this one little thing.” No, you’ve got these hundreds of records that are unnecessarily used, and that’s why it’s so important to really look at those small orders and so on. You can save tons of money that way, and it’s so easy for someone like me to come in and just see all of the waste going down the streamline like, “Oh my Lord, look at all that hidden money,” and save tons, millions for people just with using common sense, really.
Can you talk about where you’ve seen some success?
I think the biggest thing is in customized machinery. What I found out is that a lot of the engineers would be in fear of their jobs for job-security reasons, and they would not like to release a lot of the information they worked on and had patents for. It would be where every time a customer had a machine order, they’d go through the same process every time. They’d have the bills of materials, they’d have all the blueprints and so on, and I’d have to go step by step looking at the blueprints, getting all the things combined, so on. They weren’t using any electronic stuff; they were all trying to keep it off so they could have their job security by detailing out each thing on a CAD drawing and so on. What I would do is take all that and standardize it.
It’s a thing that we have to become with them to say, “You know what? You’re always going to have a job here. We’re always going to need an engineer.” The first thing is to take away some of that fear, and I do a lot of stuff with breathing and exercises in the office to calm people down and even sometimes use music in the background to just calm their peers down. I’m not here to take their jobs away; I’m just here to make the process easier and automate it. I would make assemblies and each time, they use the same stuff, but it would be a different size, maybe a different color, but function and form, it was the same.
Once we got that down, again, you can build the leverage back up. You can negotiate because now you have all these parts that are very similar, and you can go in and make the good blanket orders, so you can negotiate yearly contracts instead of every machine and then, really, losing all of your leverage ability. That way, when you’re standardizing products, you can build up a leverage and have really great negotiations.
Thanks, Rebecca. Do you have any other final recommendations or comments? For example, recommendations for purchasing managers or engineers or…?
I say it’s important to have purchasing in on early design. A lot of people always think of purchasing people as clerical; maybe they don’t give them the type of recognition that they need to get involved. When you’re dealing with holding the purse strings, as I like to say, in purchasing, you can make significant money because you’re not in sales, you’re not in marketing, which costs a lot of money to advertise marketing. It costs money to get a campaign out there.
With purchasing, it goes direct to the bottom line. If you’re there with the engineers and they’re like, “I want this to be in stainless steel.” “Well, stainless steel is really expensive. Can we get away with carbon steel and then using a better paint? Then we can just cut the cost right in half.” Those things are best discussed right when they’re creating their designs so they can take all those costs out of there at the beginning of the process instead of later on. I think that’s really important: early supplier involvement and early purchasing involvement.
Thanks for sharing today.
About Sharon Hartley
Sharon (Neuman) Hartley, C.P.M.
Purchasing Manager/Award Winner/Musician/Yogi/Entrepreneurial Visionary