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Lean companies
- Reduce the number of suppliers for each commodity of purchases to a minimum, a few or often only one
Traditional companies
- Deal with many suppliers, so many that it is impractical to fully understand the capabilities of any one of them (quality, capacity, cost structure, or technical capabilities)
- Divide the volume among many suppliers to the extent that their company's purchasing bargaining power and influence is low at all of them
- Focus primarily on price in making buying decisions
Benefits of Lean
- Speeds development and fulfillment operations because fewer and more dependable suppliers make fewer mistakes to cause disruptions
- Permits much more time to be spent with a supplier to develop a close relationship and understand his capabilities
- Makes you a major customer of your important suppliers which allows you to influence quality, price, delivery schedules, and capacity decisions
- Reduces the number of variables with which your manufacturing, quality, and reliability people have to cope, producing better products
- Allows design engineers to work closely with supplier engineers to effect functional, cost, and quality improvements in products and to make outsourcing decisions