Why should you Involve Suppliers In Your Lean Journey

Value is defined by the customer. The end customer defines value as does each customer in the process. If you are on a lean journey and involve suppliers, you are the customer to your tier 1 suppliers, tier 1 suppliers are customers of tier 2 suppliers, etc. Looking at the entire value stream helps determine what creates value for each customer in the process (as well as the end customer). For manufacturers whose products consist of many purchased components (or whose material cost far outweighs labor cost), understanding the entire value stream and the what customers need at each point is critical. Leaning the internal operations of such an organization is good; however, stopping at that point would be a mistake.

The value stream includes all of the information and material flow steps necessary to bring a product to the end customer. This obviously involves suppliers. In many cases, both the information and material flows going in and out of each player in the value stream are full of wastes that would go unseen without mapping the value stream.

This has a very obvious implication for suppliers. Most organizations do not pull from suppliers, and many of those that do have "pull" systems in place are pulling from a supplier that is operating in "mass production" mode. This means that additional costs, in the form of inventory, defects, and other wastes are inside the supplier's four walls. Any customer that assumes that those costs are not being passed on to them is naive. Thus, it is important to setup true pull systems with suppliers, who have bought in to the philosophies of lean.