Original Date: 08/20/2001
Revision Date: 12/14/2006
Best Practice : Master Purchase Orders
In 1999, Lockheed Martin Naval Electronics & Surveillance Systems-Surface Systems implemented Master Purchase Orders for its development programs. The process enables the company to stay competitive in the marketplace by obtaining material and services at pre-negotiated pricing without buyer intervention.
Previously at Lockheed Martin Naval Electronics & Surveillance Systems-Surface Systems (NE&SS-SS), the purchasing process took up to 40 working days to move an order through material request completion, financial approval, direction to the buyer queue, buyer’s completion of pricing and availability assurance, compiling a paper audit trail, expeditor’s time to confirm and/or expedite material delivery, and delivery of material and/or purchases. In 1999, Lockheed Martin NE&SS-SS set out to streamline its process by implementing Master Purchase Orders.
A requestor initiates a purchasing order by filling out a standardized reporting form, secured through the Intranet web site, to create a paper audit trail. Next is verification of the order to ensure that neither the expenditure limit has been exceeded nor that the period of performance has expired. After verification, the requestor contacts the supplier to obtain a written quote based on pre-negotiated rates, and electronically delivers the completed form and quote to the Material Request Analyst for processing. Data warehouse reports are used to provide tracking and verification through approvals, order placement, receipt by supplier, and delivery at Lockheed Martin NE&SS-SS.
Since implementing Master Purchase Orders, Lockheed Martin NE&SS-SS reduced its procurement cycle time from 40 working days to just 24 to 48 hours. This process enables the company to obtain competitively priced materials and services; shortens purchase order placement time which helps keep programs on schedule; and reduces labor costs by decreasing buyer involvement in the purchases.
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