SUPPLY CHAIN MANAGEMENT Solutions

“What is the key to getting the RIGHT parts in the 
RIGHT quantity to the RIGHT place at the RIGHT time 
and for the RIGHT price?” 

If you answered, “Get the best suppliers,” you are 
correct. 

But we all know that’s easy to say and very hard to 
accomplish. 

In my experience the best approach to “Get the best 
suppliers,” is to initiate a Supply Chain Management 
program that has SUPPLIER DEVELOPMENT at the 
center of its methodology.

If your company is having trouble getting the RIGHT 
parts in the RIGHT quantity to the RIGHT place at 
the RIGHT time and for the RIGHT price, don’t pass up
reading this week’s BB&BP Bulletin, “Supply Chain 
Management.”

Have a nice day, keep the faith, and stay connected.

Bill Gaw
bg@bbasicsllc.com
760-945-5596

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BUSINESS BASICS & BEST PRACTICES BULLETIN

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Competitive Knowledge for Manufacturing People 
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SUPPLY CHAIN MANAGEMENT
“It’s the Basics, stupid!” 

Companies will never achieve their full growth and 
profit potential, let alone gain the benefits of their 
supply chain, as long as business leaders continue to 
talk about value-added supplier partnerships while 
continuing to treat their suppliers as adversaries.

NON-VALUE-ADDED ACTIVITIES

Material handling and inventory storage are two of 
manufacturing's high cost, non-value-added activities. 
The elimination of the stock room, as it is known 
today, should be a strategic objective of all 
manufacturers. 

Moving materials to their point-of-use is not a new 
concept, the auto industry has done it from its 
beginning and all industries have had success with 
point-of-use, low cost hardware. 

SUPPLY CHAIN DEVELOPMENT

Supply chain development is the key to point-of-use 
logistics, and it's time to realize that there is much 
more to increasing supplier contribution to gross 
profits than simply placing purchase orders with the 
lowest price bidder. "Strategic Outsourcing" that 
focuses on getting the right materials to the right 
place at the right time must replace "beating-up" on 
suppliers for price reduction alone. 

A CASE IN POINT

A manufacturer of electronic component test equipment, 
in response to its need to increase factory floor space 
to build a new multifunction tester, decided to convert 
stockroom space into a production area. It was agreed 
that NONE of the new tester parts would enter the 
remaining stockroom and that ALL COMMON PARTS 
would be relocated to their using production areas as 
"point-of-use" inventory. 

The key to making this project a success was the 
development of a powerful supplier support network 
that provided timely and innovative "point-of-use" 
logistical support. 

High communications integrity, scheduling flexibility/ 
responsiveness, superior quality, special materials 
transportation/storage hardware and a positive kaizen
mindset were some of the characteristics of the 
developed relationship. 

Three years after the start of the project, this 
Manufacturer was a market leader and most of the 
credit goes to their supplier development team and 
the powerful supplier support network that it helped 
develop.

VALUE-ADDED SUPPLIERS

In today's competitive business environment, many 
manufacturing companies are turning to value-added 
supplier partnerships to achieve the material 
availability performance that is a requisite to 
successful point-of-use logistics. 

When a company forms a partnership that performs one 
of the links in the supply chain, both stand to 
benefit from the other's success. 

The power of supplier partnerships is undeniable. 
To a great extent, they have the best of both worlds: 
the coordination and scale associated with large 
companies and the flexibility, creativity and low 
overhead usually found in small companies. 

Suppliers have knowledge and insight but aren't burdened 
with guidelines from a distant headquarters. They don't 
have long forms to fill out and weekly reports to render 
and can act promptly, without having to consult a thick 
manual of standard operation procedures. 

In an increasing number of industries, value-added 
suppliers are proving to be fiercely competitive – 
delivering high quality, competitively priced 
materials to precise buyer schedule requirements. 

PARTNERSHIP RELATIONSHIP

An excellent way of establishing the partnership 
relationship is to treat each other as an extension of 
one's business. The value-added supplier should look to 
his partner for services such as special procurement 
help on capital equipment and training needs and maybe 
some process engineering or quality engineering 
assistance. 

The buying partner, on the other hand, should look to 
the supplier partner for product development input, 
cost containment ideas and high quality parts/ 
components/assemblies delivered to the right place 
at the right time. 

Most business leaders underestimate the depth and 
breadth of business skills that are required to 
initiate and nurture an effective supply chain program. 
Usually, these leaders hold suppliers at arm's length 
and struggle to keep any economic gains to themselves. 

In fact, organizations often try to weaken a supplier 
to ensure their own control of profits. This of course 
is ridiculous and is the first obstacle to be overcome 
if point-of-use logistics is to be successfully 
implemented - for without a strong supplier network 
there can be no point-of-use logistics.

SUPPLY CHAIN EXCELLENCE

Business people in pursuit of supply chain excellence 
should be advocates of: 1) business integrity, 2) day- 
to-day supplier cooperation, 3) free exchange of 
information, 4) responsive decision-making and 
5) supplier profit sharing. 

Supplier development and strategic outsourcing are 
requisites for success. They both require a "from the 
top down" commitment and investment to educate and 
train a team of professionals that can make it happen. 

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Manufacturing leaders have a responsibility to educate 
and train their team members. Help for developing a 
self-directed, World Class Manufacturing training 
program for your people is just a click away:

http://bbasicsllc.com/training-modules.htm

 

To preview twenty 1-2 hours PowerPoint® Training Presentations on CDs with expert commentary by Bill Gaw, click below: World Class Manufacturing Training .

  STAY CONNECTED

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


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

Manufacturing Knowledge you’ll not find at offsite 
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Lean Manufacturing - Balanced Scorecard 
ISO 9000:2000 - Strategic Planning - Supply Chain 
Management - MRP Vs Lean Exercises - Kaizen Blitz 
Lean Six Sigma - Value Stream Mapping

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