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Home » Benefits Abound in Lean-Based Relationships with Suppliers

Benefits Abound in Lean-Based Relationships with Suppliers

June 11, 2013
BCG Perspectives

The most effective way is to forge links with key suppliers on the basis of lean principles. In addition to yielding cost savings, this kind of collaboration can form the foundation of a profitable strategic partnership. More than simply an approach to eliminating waste in procurement, creating such relationships means leveraging existing lean techniques to the fullest and using them to transform a manufacturer's entire supply chain.

The overriding goal is to create a spirit of partnership by identifying the potential for mutual improvement on a fair and collaborative basis. Although many manufacturers approach their suppliers seeking ways to reduce material costs, typical efforts produce only short-term savings. Few form the basis for sustained, close collaboration. Building trust comes first. If this is done effectively, savings and other benefits will follow. Because those benefits extend beyond immediate savings, it can be advantageous to form a lean-based partnership even with suppliers in low-cost countries.

The best results have been achieved using a three-step integration process, which begins with optimizing the way information and materials flow between supplier and manufacturer. It extends to the way the supplier produces and can lead to collaborative product design and redesign. Ultimately, the process involves the full integration of a key supplier into a lean culture of continuous improvement. The main focus should be on enhancing supplier innovation and responsiveness"”along with cost reduction over entire product life cycles"”rather than on quick savings. Supplier integration has been achieved successfully by major consumer-product manufacturers, especially in the automobile industry. Toyota is one of the notable examples. Before beginning the process, a manufacturer should analyze its own level of lean development and ambitions for the future.

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Keywords: lean initiatives, lean in supplier networks, supply chain management, lean supply chain management

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Sourcing/Procurement/SRM Technology Business Strategy Alignment Global Supply Chain Management Food & Beverage
KEYWORDS BCG Perspectives Business Strategy Alignment Food and Beverage Global Supply Chain Management lean in supplier networks lean initiatives lean supply chain management Sourcing/Procurement/SCM Supply Chain Analysis & Consulting Supply Chain Management Supply Chain Management: Supplier Relationship Management Technology
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