Continuous Improvement Training Program
A Continuous Improvement Program
Featuring 8-Training Modules by Bill Gaw

Increase the effectiveness of your
Lean Manufacturing Training Program
Lean Manufacturing Simulation Game 

Goals and Expectations

Once you have analyzed your company's current status, goals and expectations for your supplier partnership pro­gram must be developed. Because developing supplier partnerships requires a great deal of effort on your part and on your suppliers' part, it doesn't make sense to attempt to develop partnerships for all of your commodity purchases. Your first goal should be to establish an annual commodity code purchase cutoff point for developing supplier partner­ships. You can easily do this by drawing a cutoff line on Figure 3. Partnerships for commodity category codes fall­ing below the line should not be pursued.

Goals often defined for a supplier partnership program include:

• Number of suppliers (supplier base reduction)
• Number of volume purchase agreements
• Cost reduction
• Number of certified suppliers.

Reducing your supplier base will simplify your business operations and allow you to spend more time with each supplier.

A goal of increasing the number of volume purchase agree­ments will demonstrate your commitment to developing long-term commitments with your suppliers.

Cost reduction is a reasonable goal in a supplier partner­ship program. Reducing your supplier base will give your new partners greater purchase volumes. Forecasted us­ages on volume purchase agreements will enable partners to better plan their operations. Value engineering can also be used to reduce costs. Your suppliers should be encour­aged to participate in product design and engineering improvements. Cost-savings from engineering improve­ments can come from:

• Reduction of nonstandard components
• Alternate materials Specification changes
• Tolerance changes
• Process simplifications.

Your company should quantify goals for increasing the percentage of your new partners who are certified each year.

Goals for supplier base reduction, number of volume pur­chase agreements, number of certified suppliers, and cost reduction should be defined by commodity category code and in total.

In a supplier partnership program, your company should set expectations of your new partners. Expectations you might have from your suppliers could include:

• Communication/trust
• Visible/measurable quality program
• Continuous improvements
• Timely feedback/corrective action
• Defect-free parts
• Reliable supply
— On-time delivery
— Accurate quantities
• Schedule flexibility
• Least total cost
— Volume purchase agreements
— Cost stability
— Sharing of cost data
— Cost reduction responsibilities.

Suppliers should also establish expectations of their new partners. Such expectations might include:

• Communication/trust
• Volume purchase agreements
• Increased volumes
• Long-term commitment
• Forecasted demand
• Early involvement
• New products
• Design changes.

To be Continued