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Lean companies
- Know that the strategic issues with key suppliers are very important to several functional areas
- Realize that total cost is more important than the immediate price in making purchasing decisions
- Use a commodity team to make strategic decisions concerning suppliers
- Staff this team with members from the appropriate functional areas, which might be purchasing, engineering, manufacturing, quality and reliability, etc.
Traditional companies
- Allow purchasing to make all strategic decisions regarding suppliers
- Make purchasing decisions almost entirely on price
- Have no data or systems to quantify the cost of poor quality and reliability, undependable delivery, engineering assistance, inventory and transportation issues, etc.
Benefits of Lean
- Provides a forum for engineering, manufacturing, quality and reliability, etc. to influence the criteria for selecting and managing strategic suppliers
- Directs the work of quantifying the intangible costs of a commodity to be used with the pricing in making strategic decisions