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| Mark Doman |
Many small to medium manufacturers feel caught in the middle. They are getting pressure from their customers to reduce prices, shorten lead times and be JIT wizards, while at the same time getting no respect from their own suppliers on prices and lead times.
Many lean manufacturers are trying to cope by doubling down on their implementation of lean within their own facilities. This is well and good, but when they deal with their own suppliers and customers, they tend to forget all the great lessons they have learned about lean.
Lean does not start and stop at the four walls of your manufacturing facility. In fact, lean thinking is just as important in your relationships with your suppliers and customers. Lean can be a game-changer for the manufacturers being pushed and pulled in the middle of the supply chain.
I recently gave a presentation, “Supply Chain Meets Lean,” to the Institute for Supply Management Southeast Michigan (ISM SEM). I tried to show how the basics of lean thinking could be applied to typical supply chain processes to solve problems, reduce waste and lock in loyalty.
The same lean thinking, tools and techniques that are used inside your company should be regular parts of your dealings with your suppliers and customers. For decades, Toyota has made lean a condition of doing business with it — and look at the results.
Some of the small to medium manufacturers I have dealt with cannot get over the mental hurdle of “We are not big and powerful like the OEMs and cannot impose changes on our suppliers and customers.” They are caught in the “might makes right” way of thinking, or which way the money flows is who has the power to dictate changes.
My response is to reframe the situation around the lessons of lean. Every company wants improved performance from its supply chain, but may not know how to go about doing it. Start the lean dialogue. Open your eyes to new ways of working together to reduce costs and shorten lead times for the benefit of both parties. Help them out. Help yourself out. They will not forget you when the next contract is up for bid.
What is an easy way to start the lean relationship?
First, redefine who your customer really is. It is not the monolithic “Big C” Customer. Your Big C customer has many “small c” customers (and processes) that deal with you directly or through other people — and they all have requirements that you need to know about and meet. Your small c customers are the purchasing managers who placed the orders, the engineers who designed the products, the guys in receiving, the material handlers, the operations supervisors and the actual assemblers, machine operators or frontline employees who will be working with your product. All of these small c customers (and their processes) have their own specific requirements that you may have no knowledge of.
The same is true for your suppliers. There are many “small s” suppliers who, most of the time, you never interact with because all your communications funnel through your sales contacts. Again, those people in engineering, logistics, operations, billing etc. don’t know what your specific requirements are, and until you start the lean dialogue, they don’t care.
Unless you regard everyone in your supply chain with the small s-c mindset, you will be ignorant of your small c customers’ specific requirements and what they consider to be waste and value-added about your products and processes and your small s suppliers will be in the dark about what your specific value-added requirements are, as well.
Next, look in the mirror and really see how you usually identify problems and waste in your supply chain. My guess is that you have a couple of “go-to” ways of identifying problems and most of them are reactive — all the way from doing nothing (“no news is good news”) to angry phone calls and emails to episodic feedback to some type of periodic review through traditional channels (sales or purchasing).
Then, reflect on how you normally go about trying to fix the problems and reduce waste in your supply chain. Ingrained in your organization and culture, you probably have fixers and firefighters who are great at reacting to the problems that always seem to come up between suppliers and customers. They’re innovative and resourceful, but more often than not they end up adding and adding — more overtime, more employees, more inspections and more machines to run more production, and add more inventory “just in case” or to make a problem go away for a customer.
Now, let’s apply some of the lean thinking that you already use within your company to identify and solve the root causes of the problems in your supply chain. It’s not easy, but it’s one, two, three steps to more sustainable lean relationships with your suppliers and customers.
- Go to the gemba. How do you know what your small s suppliers and small c customers really need? What is value-added and what is waste? Get out of your office and go to the gemba, and see and hear for yourself. Not just lunch with the big guys or your sales or purchasing contacts, but go to where the work is being done. And not a stroll-by either! Do a formal waste-walk. Talk to the small c and small s folks and ask them point blank how their processes work, what their requirements are and if you are meeting them. (Better yet, send some of your lean-trained front-liners to talk to their front-liners.) Ask them what ideas or suggestions they have to solve problems or reduce waste in your supply chain relationship with them. They will probably be amazed you asked at first, but if you stick with it, you’ll discover a lot of low hanging fruit.
- Key metrics. Don’t just settle for anecdotes and episodic feedback. And don’t have a battle of your metrics versus their metrics. Establish a few standardized, mutually agreed upon small s-c metrics so you both can trust the facts and measure what is going on within the processes.
- Joint kaizen teams and the A3 report. Now use what you saw and the key metrics to agree on the real waste in the supply chain processes and then commission joint kaizen teams to use a standardized problem-solving methodology — A3 report — to reduce the waste and solve the problems. You will be amazed at the power of joint teams with data and metrics to make process changes that benefit both parties.
For those of you who think you don’t have the time to do these three steps, be honest and add up all the time and money you spend putting out fires with your suppliers and customers. All that time and effort, but the problems keep coming back.
Proactive work always feels that way until you finally stop running around with your hair on fire. Break the cycle. Try these three lean steps and you will lock in supplier respect and customer loyalty because your lean relationship and products will hit so many sweet spots within the supplier — customer value chain.
Mark S. Doman is a Pawley Professor in Lean Studies at Oakland University in the Human Resource Development Department and the Director of the Pawley Lean Institute. Prior to joining Oakland University, he had 25 years of business experience with Ford and AT&T, where he held various executive positions in operations, human resources and legal. He has led several major organizational change initiatives throughout his career that included corporate restructuring, Lean Workouts, kaizens, TQM and process re-engineering. He is the author of “A New Lean Paradigm in Higher Education: A Case Study.” Quality Assurance in Education, Vol. 19 No. 3, 2011 and “How Lean Ready Are You?” Target, Vol. 28 No. 2, 2012. His email address is doman@oakland.edu.
