Enabling lean procurement: a consolidationmodelfor small-and medium-sized enterprises

Purpose - Gaining access to the cost savings and production efficiencies derived from lowering inventories in the supply chain is as vital for small-to medium-sized enterprises (SMEs) as they are for larger manufacturing firms. Lean procurement as a concept has been advanced as a method for achieving this. The purpose of this paper is to discuss a method of addressing some of the critical barriers to implementing lean procurement methodologies in an SME environment through the application of procurement consolidation techniques. Design/methodology/approach - First the relevant theoretical and practitioner literature is reviewed, a theoretical consolidation model is developed, and a worked example is presented. Findings - The barriers face by SMEs trying to implement a lean procurement philosophy are significant. Low volumes, small lot sizes and high frequency purchases incur significant additional distribution costs. The paper argues that the use of a double freight consolidation model (DFCM) is useful to SMEs for maximising the trade-offs between volume and frequency in an international supply chain. Research limitations/implications - Whilst this research suggests that SMEs can indeed use the DFCM for lean procurement, the next step is to apply the model in practice. Originality/value - This paper synthesises consolidation modelling and lean procurement principles. This synthesis is further enhanced by applying a simulated example to the challenging SME environment. The application of the categorisation of both buyers and vendors to the consolidation model is novel.