Business Basics
Home Page

Who is Bill Gaw?
And why should we
listen to him?


lean manufacturing principles and techniques training

How to implement, optimize and sustain
a lean manufacturing program
The Lean Manufacturing Toolbox

Add pizzazz to your lean training
program with participative exercises.

Manufacturing Simulation Game-Plus

Supply Chain Integration
Part 3 of 3

privacy policy

To review our training
packages, simply click
on any of the links below:

Training Materials and Options

Lean Manufacturing Solutions

Lean Manufacturing Toolbox

Performance Measurement Training

Poka-Yoke and
Process Improvement Training

Lean Manufacturing -
Small and Medium
Sized Businesses

Supply Chain
Inventory Management

Lean Six Sigma

Strategic Planning Training

World Class Manufacturing

Continuous Process Improvement

Kaizen Training

Kaizen Blitz Event


Best-In-Class Manufacturers

Best of Gaw Lean Management Articles

Golf Training Program



Successful supply chains will show the following characteristics and the role of the coach is to integrate them seamlessly and facilitate them happening in an efficient and timely manner:

1.        the ability to understand the mind of the consumer and create products or services, market, and sell them

2.   be able to specify the processes necessary to source, make, and deliver the product or service

3.       identify potential players in the chain and select supply chain members

4.       develop sources for gathering customer knowledge and technology connectors

5.     identify the roles and responsibilities for all the players based on their strengths

6. set goals for the supply chain that all members are striving to ac­complish

7. find supply chain partners that share similar values

8. one leader.

The coach needs to act as the aggregator of the capabilities of each element in the chain into a single seamless chain. This individual needs to do an analysis of the functions to be performed by the system and ensure each function to be performed is shifted to the most efficient firm in the system. Some of the other responsibilities of the coach are establishing and continually promoting a strong, ongoing relationship among the members, assimilating knowledge about consumers and the market, communicating that knowledge with other supply chain mem­bers, and setting goals for all supply chain members along with con­tinually improving the chain through its partners.


As we move out of the company to address leveraging the supply chain for improved business results across the chain, change manage­ment becomes the managing of the chain and all its components. As we saw in figure 4, the complexity becomes awesome, and change is now an everyday occurrence either at some node or within some com­pany within the chain. The need for an integrator/coach/facilitator to ensure smooth flawless execution across the chain is embodied in the statement, "Velocity improvements within the supply chain are based on the chain's ability to manage change." The orchestrator of these velocity improvements is the integrator/coach.


In figure 5 we are looking at the results of some supply chain analysis that was done on a business. The upper number near each icon repre­sents the number of participants prior to any work being done on the supply chain outside of normal materials management/logistics work. We had 170 suppliers to our suppliers and 130 suppliers themselves and produced the products at 7 manufacturing locations. This series of products went through two major channels of distribution to approxi­mately 100 million consumers.

The result of the analysis streamlined the supply chain to 35 suppli­ers to our suppliers, a decrease of 135, and reduced our suppliers to 20 from 130. We also reduced the sites where this product was produced from 7 to 3. The business benefits of this were threefold: (1) speed to market accelerated (weeks of inventory taken out of system) and cash invested in system dropped; (2) total delivered cost/cost of goods sold plummeted by millions; (3) current supply base are true partners— total sharing of information and capability.

The second example I would like to share is not a macro tool look­ing at the entire supply chain but a more precise surgical instrument focused on the relationship between supplier and customer. I call it a Site Level Executional Agreement (SLEA). It applies to any supplier-customer relationship within the chain. The following is a formal defi­nition:

A Site-Level Executional Agreement is defined as an agreement between a company site and a supplier site that specifies certain proce­dures and responsibilities to optimize the day-to-day and week-to-week performance of the material supply chain. Agreements and measures are specified in five different areas: quality, planning, inventory, deliv­ery, and other. These measures are grouped together in the form of a supply chain scorecard as a means of regularly reviewing the overall performance of the supply chain vs. desired targets or action limits.


Just keep in mind there is one of these for each key or critical cus­tomer—supplier link.


Format for these types of agreements is not important. Intent, con­tent, and rigor are important. During the presentation, I shared some examples of this agreement along with logged savings to date. Enough here to say one of these agreements contributed over $4 million in savings. This was approximately a 20 percent reduction in cost of an item.


Development of an understanding of what a supply chain is helps one develop the philosophy in our organizations to become collaborators and good owners of the supply chain. Breaking through the barriers to growth in integrated supply chain management will be important to the survival of or organizations in the near future. The two examples in this paper reflect the macro view (entire chain), which for some orga­nizations will not be easy to do immediately, and the micro view (SLEA). Any organization can start the micro view immediately and begin to reap the benefits to fund the further development of supply chain integration.

As new chains are developed due to changes to process, product, or logistics, the winner at the consumer will be that chain that managed change the best. New chains, like new products or processes, will take time to execute with excellence. Therefore the concept of a coach to that chain in its early days is necessary to ensure a vertical start—up the chain. Just as we ensure vertical startups of products or processes with the use of change agents, project managers, and facilitators, new supply chains need this nurturing to be successful from the start.

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 11

A Gift for You

Need help in bringing this training to your company, may I suggest that you forward this Web page to your leader. If you do, we'll send you our Power-Point presentation, "7-Rules for Surviving in an Entirely New Economy."

To open the
"Forward to" form:



To stay current on Lean Management Basics and Best Practices, subscribe to our weekly MBBP Bulletin... and we'll send you our PowerPoint presentation, "Introduction to Kaizen Based Lean Manufacturing™." All at no cost of course. 


First Name:
Your E-Mail:

 Your personal information will never 
be disclosed to any third party.

privacy policy

Here's what one of our 13,000 plus subscribers
wrote about the MBBP Newsletter:

"Great manufacturing articles. Thanks for the insights. I often share portions of your articles with my staff and they too enjoy them and fine aspects where they can integrate points into their individual areas of responsibilities. Thanks again."

               Kerry B. Stephenson. President. KALCO Lighting, LLC

"Back to Basics" Training for anyone ... anywhere ... anytime

Business Basics, LLC
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596 

© 2001-2009 Business Basics, LLC