THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
Sourcing professionals have increasingly recognised the benefits of developing supplier relationship management (SRM) capabilities within their organisations. The challenge is not whether to do it, but how to do it. Many are finding Lean Six Sigma (LSS) to be the answer, suggest the authors.
LSS, which has its origins in manufacturing, combines the analytical techniques of Six Sigma, which reduce process variability, with the structured approaches of “lean”, which eliminate non-value-added activities. Companies such as Motorola, GE and Honeywell are now using it to optimise relationships with suppliers.
Three case studies are used to illustrate the power of LSS. The first describes a global speciality chemical company that suffered from poor purchase price data integrity and blocked invoices. The second looks at a process-intensive manufacturer whose turnaround times were being hit by poor cleaning practices. And the third concerns a big telecoms firm seeking to improve order fulfilment and grow revenues.
The CPO’s role includes championing the LSS-SRM process internally and with suppliers; getting the right people from sourcing involved; and working with key stakeholders to prioritise LSS business initiatives.
