In an effort to flow lean to suppliers, firms are often internally focused. They are concerned with how suppliers can support their needs and tend not to view the situation from a systems perspective. Often it is about what suppliers need to do to satisfy their customers — which is certainly an essential ingredient. However, firms tend to focus on the invidual parts (sometimes quite literally) rather than on the whole. For example, in an effort to improve material flow in the supply chain, inventory becomes the customer’s sole focus. Meanwhile, customers may forget about the interactions among firms and the relationships that can either support or hinder progress in becoming lean throughout the extended enterprise.
Often it is the “white spaces” (I adapt this term from the classic book, Improving Performance: How to Manage the White Space in the Organization Chart) or intereactions and relationships between firms that are the least visible and least addressed, yet have great potential for harboring hidden cost drivers and for holding the keys to becoming lean. Without a functioning relationship, how can a customer begin to ask a supplier to embark on changes that may be disruptive to the supplier in the short term? On what basis would a supplier want to adopt lean practices without the promise of WIIFM (what’s in it for me)? Making substantive changes just to retain a customer’s business is not always sufficient motivation for a supplier. Without a reasonable relationship in place and a two-way flow of information between customer and supplier, the supplier’s response may be lip service without any real change. The relationship is the “soft stuff” and the inventory is the “hard stuff.” And as they say in change management and organizational development circles, the hard stuff is easy and the soft stuff is the hard stuff.