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Supply Chain Management: Invest in Your Suppliers

Jul 1st 2009
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By Scott A. Heintzelman

Lean manufacturing is a term that has gained great exposure during the last 10 years. If you know about Lean, you’ve probably heard about reducing waste of all kinds on factory floors through improved processing efficiencies. What you may not know is that Lean philosophy can be applied to other parts of your operations as well as Supply Chain Management.

A Supply Chain review is a great opportunity to dispose of waste and make processes more efficient. Even if you have a “Leaned Out” factory floor, the Supply Chain provides numerous opportunities for improvement.

One of the biggest areas for reducing waste in a Supply Chain is through inventory. Inventory, if not managed properly, can tie up valuable resources such as cash flow. By just saying we need to reduce inventory levels does not reflect the true value of Lean within the Supply Chain.

To better understand the meaning of Lean within a Supply Chain is to create a more equal relationship between suppliers and buyers. More specifically, the idea is that inefficiencies and waste in the supply chain in the manufacturing processes of suppliers must be eliminated to allow the supply chain to be more responsive to customer demand, and this in turn will allow for reductions in inventory. In a Lean Supply Chain, buyers and suppliers invest in each other and treat each other as long-term partners in business and within the enterprise.

This is done through sharing information between the buyer and the supplier by use of resources and knowledge. By partnering, the supply chain becomes the responsibility of both the buyer and supplier instead of just the buyer. By sharing information, the supplier can recommend improvements for product or part ordering and identify less expensive and more efficient ways to provide the product while maintaining or improving product quality and overall customer service. The supply chain becomes “Our” supply chain.

To best summarize this process is for buyers to partner with their suppliers. Invite them to participate in supply chain reviews and provide them with knowledge and information regarding the current supply chain cycles. By inviting them in, they will make the process more efficient. This will increase profitability for both the buyer and supplier and ultimately greater customer satisfaction. Ultimately everyone is on the same “Team” under Lean Supply Chain management.

Contact me to request our Lean Checklist.

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