Supplier Relationship Management - How Lean Principles Can Deliver Supplier Value

A Supplier Relationship Management (SRM)service from concept to launch, order to delivery and
programme has a primary goal of increasing value forraw materials into the hands of the customers.
both the buying organisation and the supplier. OneTo identify the value stream for a customer, a good
way to do this is to look at the core processes thatidea is to "walk the process" and see what happens
deliver value along the supply chain and workat every step. Keep an eye out for waste or
together on projects to improve them. A key tool innon-value added activities as you do this.
the SRM toolbox is Lean Design. This article will showIt can be relatively easy to spot waste in a
you how this works.manufacturing organisation - it tends to create visible
The purpose of process improvement is to eliminatesigns such as piles of work-in-process. But what
the root causes of performance deficiencies inabout a process in a service industry? Here are some
processes that already exist. These deficiencies maymanufacturing terms with a description as to what
be causing real pain for the organisation or they maythe equivalent might be in a service organisation:-o
be preventing it from working as efficiently andDefects - incorrect data entryo Over production -
effectively as it could.preparing extra reports, reports not acted upon,
A good tool to use is the Lean methodology.multiple copies in data storageo Transportation -
Lean is about the elimination of waste in a process.extra steps in the process, distance travelledo
These wastes are applicable to processes in bothWaiting - processing monthly not as the work comes
manufacturing and service sectors.ino Inventory - transactions or paperwork not
Lean methodology has five core principles. Theseprocessedo Motion - extra steps, travel from office
are:-to office or desk to desk and extra data entryo
1. The definition of Value.Processing - multiple sign-offs
2. The identification and integrated management ofThe purpose of applying the Lean methodology is to
the entire Value Stream and elimination of waste.identify waste so that it can be eliminated. This
3. The design of production systems that ensureresults in an improved service and a lower cost.
materials Flow.Waste is anything other than the minimum amount of
4. The introduction of Pull Systems to supportequipment, materials, parts, space and worker's time
customer service.that are absolutely essential to add value to the
5. The continuous improvement of all businessproduct or service.
activities to achieve Perfection.There are many ways in which waste can be
Let's describe Principles 1 and 2 in a little more detailcreated. Here are some examples:-o Layout
Principle 1(distance)o Long set-up timeso Incapable processeso
A step in a process adds value if:o the customerPoor maintenanceo Poor work methodso Lack of
recognises the valueo it changes the product, andotrainingo Lack of adherenceo Poor supervisory skillso
it's done right the first timeIneffective schedulingo Inconsistent performance
A step may be non-value-added but necessary if:o itmeasureso Functional organizationo Excessive
is required by law, regulation, or contracto it iscontrolso No back-up/cross-trainingo Unbalanced
required for health, safety, environmental, or ethicalworkloado No decision ruleso No visual controlo Lack
considerations.of workplace organizationo Supplier qualityo
Value-added activities change the form, fit, orInconsistent supply of detail partso Over-engineeringo
function of a product or service delivered to aInspection
customer. If the activity doesn't do any of theseWorking with your key suppliers in a SRM
three, it is probably non value-added.programme to identify and eliminate waste in the
Principle 2supply chain can significantly boost the value you get
The value stream is the activities that are necessaryfrom your suppliers.
to design, order and provide a specific product or