Monday, September 16, 2013

Why do we need our suppliers to be consistent with our lean manufacturing strategy?

As mentioned in Dell's lean manufacturing story, it not only set high standard for itself in terms of zero inventory, but also placed a high volume of pressure to its supplies, since Dell wanted them to stock the inventory (in the form of components) for it. Dell is not the only company that treats its suppliers like that. Coca-Cola, the leading FMCG giant, is also implementing the same kind of strategy to keep its suppliers at the same pace.  

According to John Postel, Manager of Contract Packaging, Coca-Cola expected to see its suppliers running their organization similar to how Coca-Cola runs it. And similar to Dell, Coca-Cola is creating scorecards and performance matrix to assess its suppliers' performance and provide feedback and advice to improve their efficiency and quality. 

The lean manufacturing that carried out by Dell and Coca-Cola, to some extent, is similar to what Seattle Children's Hospital and Starbucks hope their employees to do. Lean manufacturing urges the company to improve efficiency, streamline and perfect and process, and reduce lead time. This can not only be accomplished by observance and researches by supply chain gurus, but also the joint efforts by employees who deliver the service. As far as I am concerned, the related training to help employees identify problems, and establishment of a smooth communication system to let the problem to be heard on time are the other key elements that lead to the success of a lean manufacturing strategy.

While amazed by the fantastic outcome brought by lean manufacturing, I am a bit worried about the supplier relationship of those companies. Though performance metrics and professional advice do help these suppliers to grow with the company, do they have the cost, training,  and time to implement these improvements, given the pressured lead time? In order to succeed in the long run, I believe those companies have to maintain a good relationship with their suppliers in the way they value their customers. Customers do contribute to the revenue, but suppliers do that beforehand. 


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