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Supplier Relations
The principles of lean manufacturing have been in use since the early 1950s. Since that time, many Western companies have improved their operations using its tools, but there are still those that lag behind. Companies at the forefront of lean thinking realize that as markets become increasingly global, the tactics associated with the discipline are even more relevant. Impatient customers with no tolerance for defects are but two reasons why organizations must continue to pursue excellence via lean manufacturing. Of equal relevance for the supply chain management movement, the rapid globalization of markets and the trend toward outsourcing are two more compelling reasons to get on board.
The lean attitude toward product defects centers around the idea that all upstream processes impact the quality of the finished products coming off the line. In the lean factory, poor quality is not compensated for at the end of a production run via rework; quality is built into every step of the process, beginning with product design. Lean enterprises understand that quality begins well outside the confines of their factories with suppliers, strategic partners and, most importantly, customers. If an organization is unable to share lean practices with its business partners, it will never approximate the real potential of lean manufacturing. In a manufacturing environment, the journey to lean excellence centers on supplier relations.
As is the case in all lean-related endeavors, the drivers behind supplier relationship management focus on the elimination of waste and continuous improvement. Within that framework, the basic principles of the approach are as follows:
Strategic collaboration with raw materials suppliers on all facets of procurement, from component design to final delivery
Rationalization of supplier networks and the creation of open-book partnerships
Long-term relationships as opposed to short-term contracts
Recognition of the profit motive, with an emphasis on cost reductions over time
In order for international organizations to increase velocity in their supply chains, the above principles must be applied consistently across all theaters of operation. While this is indeed true for partnerships with raw materials suppliers, the same principles and goals can be applied to all types of vendor endeavors. Beginning with raw materials suppliers, lean companies must find ways to increase velocity in product design and time to market. Given the capricious and fast-changing tastes of today's consumer, speed is a requirement for any company to create sustainable competitive advantage.
