Building relationships with suppliers
Lean manufacturing is used to uncover wastes within a company while improving production and customer satisfaction. Instead of holding inventory like other companies, lean manufacturing companies only produce what their customer demands. In order to find success with lean manufacturing, you must build trusting relationships with your suppliers.
Building a relationship of trust with your suppliers will require constant communication between the two of you. You must also provide them with access to some personal company information. Since they may need to drop shipments after hours, they will need access to the building, requiring you to meet with their drivers and trust in their reputation.
To build your relationship, take time to attend some of their company events. Hold joint activities together that promote both of your businesses and be sure to refer them to some of your colleagues.
Successful relationships happen when you determine the usefulness of your suppliers. While the smaller supplier may be efficient, they may not be able to provide you with the supplies you need to meet your customers growing demands. Take a look at your company and the different vendors you are using. If two departments use the same vendor, have them combine their orders to save money on shipping. Find out all the different products the vendors sell so you can see if they benefit the entire company, not just one department.
Keep suppliers on their toes by reviewing deliveries, quality, and pricing. While you may have developed a nice relationship with your suppliers, they need to know you are still in business to make money and you will periodically check their work to keep them honest. This is one of the best ways to ensure you are getting your money's worth and it can actually boost your relationship because you and your suppliers are being forced to communicate to resolve the problem.
Using one or two preferred suppliers can also reduce your shipping rates. If you are trying to expand your company, this can be extremely beneficial as you can save thousands of dollars. The more items you can get on contract with suppliers, the more negotiating room you have at your discretion.
Always price check with other suppliers to see if you are getting the best deal from your preferred suppliers. Since lean manufacturing entails carrying a low amount of inventory, you need a supplier that not only provides you with low prices, but one that understands your inventory decision and is willing to rush products as they are ordered. Pricing with other suppliers will help keep your suppliers honest with their prices and it will make them work harder to get you to sign a fair contract.
Suppliers will need a commitment from you if you plan on using them. They need to see numbers that back-up your claims so you can both commit to a long-term contract. Once you negotiate the terms of your contract, look into vendor rebates. Vendor rebates are typically given if you pay your suppliers faster than the due date. The rebates are normally small (around 2% each quarter) but this amount will add up fast if you are purchasing thousands of dollars of raw goods per order.
Lean manufacturing is a long-term approach at saving money and improving production. Your suppliers are an integral part of your lean manufacturing process as they are in charge of the inventory. In order to make your suppliers part of your lean manufacturing process, you must clearly explain the type of lean manufacturing you are implementing. Some lean manufacturing strategies include keeping a small amount of inventory while others focus on making products when they are ordered. This will significantly impact the type of supplier you work with and the relationship you build with them.