Relationship with Suppliers: Lean Supply Chain

Entrepreneurs, Enterprise People: do you know that the very secret of existing and operating as an enterprise lies in the fact that your enterprise belongs to a Value Chain? (--> more)

In fact, the secret of success for any new-world enterprise is to be "...at the right moment in time in the right Value Chain..." and to exploit in full its potential.

It's called Value Chain because Value must be associated to each link in the Chain.
In every relationship or transaction between supplier and client there must be a transmission of Value, flowing from supplier to client.

Every link in the value-chain is an enterprise (until the end-user is reached on the demand side).
Every enterprise in the link is supplier of one or more clients, and client of one or more suppliers.

The ideal condition is achieved when maximum value is transmitted at each step (in each link of the chain): this is called the "lean condition".
The question that needs to be answered is:

How can things be structured so that the enterprise and its suppliers do nothing but add value, and do that as rapidly as possible?

Under the "lean" approach, all the intermediate steps, all the intermediate time and all the intermediate people are eliminated.
All that’s left are the time, the people and the activities that add value for the customer.

The achievement of the "lean condition" in the supply side of the value chain is always a medium-term program.
Firstly, it requires a new culture, the lean culture, to be set and shared.
It requires abandoning obsolete principles of "Contractual Power" based on offensive policies or defensive policies.
It demands that enteprise and supplier gradually position themselves onto the same level of cultural maturity, thus talking the same language.
It dictates that the old motto "shop around for the best price" is gradually converted into a new-world motto "the productive process starts at supplier's premises" and then "we are in business together".

In practice there are a number of lean initiatives to be undertaken:

• The involvement and integration of Suppliers. In steps, through adequate strategies and policies (falling under the Vendor Classification, Evaluation, Grading and Up-grading discipline), suppliers are "up-graded" in their status.
  From Normal Suppliers (motto: "...shop around for the best price...."), well identified suppliers are brought to the status of Performing Suppliers (motto: "....let's improve together...").
  The next step is to upgrade selected suppliers to the status of Integrated Suppliers (motto: "...the operational process starts at supplier's premises...."). We are in a situation of Operational Comakership.
  In the most successful situations, suppliers are further up-graded to the status of Partner Supplier (motto: "....let's make business together...."). We are in a situation of strategic integration, the so called Business Comakership.
  Several tools, including sophisticated web-based software, allow today the complete, operational integration on the supply side.
  In all up-graded situations the target is joint and shared: let's deliver the utmost value to our clients.
• Deploying Lean Techniques in strict collaboration with Integrated Suppliers and Partner Suppliers aiming at waste elimination all along the Supply Chain. The core discipline is always Value Stream Mapping (--> more), applied to the Supply side of the Value Chain.
  Many other Lean Thinking (--> more) tools, including Flow Charts, Communication Circles, Spaghetti Diagrams and others are also very helpful in establishing the "lean condition".