Organizations often find that the benefits of implementing a Lean Six Sigma (LSS) program with their suppliers are the same order of magnitude as their own implementation. Organizational progress is inherently limited by the capabilities of key suppliers. Suppliers can consider these new insights and tools, implement them quickly and amortize the implementation costs across all of their customers.
- Defect levels decline each year without customer cost or involvement.
- Total cost of quality declines through reduced returns, inspection, scrap and rework.
- Process quality assurance improves. Risk of catastrophic failure drops. Diagnosis of potential epidemic failure is quicker and more certain.
- Supplier lead-time reduction decreases average customer inventory carrying costs.
- Supplier lead-time improvement reduces customer recovery time from high demand events and provides increased capability to pursue sales opportunities.
- Increased supplier capacity to support regular, one-time and peak demands.
- Increased supplier capacity reduces customer reliance on safety stock to buffer demand.
- Process improvement projects reduce supplier costs which eventually translate into lower supplier prices.
- Supplier cost reduction improves their long-run viability as a supplier, avoiding potential change costs.
- Reduced production line changeover costs deliver smaller lots, which supports product lines with diverse features and benefits.
- Effective supplier partners reduce new product time to market.
- Integrated supply chain partners minimize transaction costs and errors.
- Integrated supply chain partners react to final customer demand changes quickly.
- Preferred suppliers manage their supplier base, reducing costs, improving capacity and lead times while reducing risks.
- Qualified suppliers allow the organization to source from 1-2 suppliers and reduce the risk of an end-run to the organization’s customers.
- A supplier scorecard sets clear expectations of improved performance.
- Qualified and preferred supplier programs provide benefits that motivate supplier investments.
- The total supplier perspective allows clear trade-offs between high and low value attributes.
- Responsive suppliers reduce the chance of long-term product shortages.
- Organizations can learn from supplier breakthroughs.