Dear Valued Supplier:
We are implementing lean manufacturing principles across our factories beginning on at the first of the year. We request that your company's leadership team join us for a weeklong lean overview presented by the lean consulting company that we have hired. As a valued supplier to our firm, out expectation is that you will also implement a lean initiative concurrently to ensure our success. Attendance is not optional. Our best wished for a Happy New Year.
Best Regards, Your Favorite Electronics OEM
Can a customer 'demand' that a supplier go lean as a condition of continued business? If a letter like this were to land in their mailbox, would a supplier be compelled to comply?
Lean manufacturing continues to gain momentum with companies around the globe, improving their operational, financial, and customer service performance. Manufacturing companies don't become lean overnight, and many experts feel that some of the greatest rewards of lean lie in the journey of continuous improvement and incremental change. Lean manufacturing is evolutionary process and a company wide positive attitude and honest self-analysis are important during the process.
All companies begin the lean process by concentrating on critical areas of their business. By maintaining a strong customer focus, evaluating and streamlining manufacturing processes, deeply integrating the supply chain into operations, and improving organizational effectiveness, companies can experience the early benefits of lean quite quickly. Lean success is best viewed incrementally. Many small improvements add up quickly, allowing for a ramp up of enthusiasm and the desire to see even more improvements. Lean success can be contagious.
Pressure on all levels of the supply chain is building as companies restructure and improve operations through lean manufacturing activities. Suppliers are under constant pressure to reduce costs, improve on-time delivery, and maintain flawless quality levels. Offshoring and outsourcing has created an increasing dependence on a global supplier community.
Lean recognizes the importance of suppliers and advocates the inclusion of supplier performance metrics into operating plans. Once lean efforts have begun in the factory, suppliers are often asked to begin the lean process themselves in an effort to reduce their lead times, reduce costs, improve quality, and make smaller and more frequent deliveries to their lean customer. Companies successfully implementing lean often evoke an almost evangelical approach to their process and try to convince their supplier community to join them.
While tier one suppliers to lean organizations may have embraced lean, there might be increasing pressure on other non-lean members of the supply chain to follow their lead. The underlying question is whether it is required, or optional, for a supplier to change their business model to meet a customer demand. Can a customer 'require' that a supplier go lean, with the associated implied threat to reduce or terminate their business relationship?