Segmenting the Supply Base for Lean

In a rush of enthusiasm about a lean supply chain, some firms expect that their suppliers will embrace lean with equal passion. Passion for lean can be contagious, but getting suppliers to adopt lean requires much more work than lean inoculation or indoctrination. Before rushing off and sending out an announcement that suppliers should adopt lean, a lot more must be in place. Some enthusiastic suppliers may be eager to learn more about how to become lean, and you need to be prepared internally to work with them and have a path already thought through. The firm should first identify which suppliers would make the most business impact and from whom both they are you would derive the most benefit by their adopting lean; which are likely to be willing candidates for lean; and who is already on or at least contemplating a lean path. This can be done through a supplier segmentation exercise focused on lean.No, supplier segmentation isn’t just for sourcing. It can be used for lean supply chain and for supplier performance management. Segmentation is a way to determine appropriate resources for managing, developing relationships and working with suppliers, depending on their relative importance to the business. Segmentation is not a science. And it should not become a long, academic exercise, either. It is best when used as a team exercise to help come to a common understanding about and categorization of the current state and for identification of future opportunities for, in this case, lean in the supply chain.

For some strategic suppliers who are vital to and have a high impact on the business, lean supplier development may be the best path. That is, a customer firm may wish to get a supplier to adopt lean principles and practices throughout its business. We are talking real lean adoption, not lip-service lean adoption (which, unfortunately, is an all too common occurrence). However, for other types of suppliers, targeted lean projects geared toward a specific result may provide the best use of resources and a quick win that can help gain support and pave the way for more lean in the future.

Thus, supplier segmentation for lean is a good first step. Actually, there is a step that must be taken before the segmentation – defining first what a lean supply chain really means to your company.

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