Extending lean sigma beyond the boundaries of the firm

I had lunch with a Black Belt recently.  He works for a company that manufactures complex electronics equipment.  In his role as a Black Belt process engineer he has four major projects to complete in a year – and his most recent project has reduced his company’s costs by £250,000.  But interestingly this was not achieved by reengineering processes in-house, but by working with a component supplier.

The supplier was a plastic moulding company that supplied carcasses into which the electronics were fitted.  The firm was not very reliable, so the electronics company was holding eight weeks stock of components in order to ensure its production was not interrupted by a failure to supply.  So with the agreement of the supplier, the Black Belt went into the component manufacturer’s operation in order to identify what was causing their lack of reliability.  What he found was a very high level of rework.   So by analysing their processes, identifying problems and eliminating them, this was greatly reduced.  As a result, the supplier now supplies almost on a just-in-time basis, thereby significantly reducing the stockholding costs of the electronics company (hence the £250,000 saving).

This industry insight is interesting at a number of levels.  But in particular it illustrates the idea that rather than simply switch suppliers to solve the problem, this firm saw their suppliers as part of the total manufacturing process.  So they used their skills and expertise to work with the existing supplier achieve their goals.  This both deepens and strengthens the supplier relationship, which has to be good for the long term success of both companies.

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