A company had been deploying Lean Six Sigma (LSS) into its business for a few years. The company was showing increasing success in both individual project improvements and investment returns that were showing up in the company’s bottom line performance. Because of this success senior leadership asked “How can we use LSS with our suppliers to improve out products?” This question was very important to the company because its products were assembled from parts delivered to them from suppliers all over the world. The company’s dependence on this global supply chain meant that the quality of its products was held hostage to the quality of its suppliers. So, it was important to figure out how to use LSS with suppliers.
The company began by benchmarking with some other LSS companies to understand how they had approached involving their suppliers in using LSS to improve their products. The results of this investigation included:
- One company decided that a commitment to deliver a percentage of cost improvement each year was included in the contracts of key suppliers.
- Another company required that the supplier write a check to the company for a percentage of the improvement for each project.
A third company sent LSS belts to the supplier locations to lead the projects and drive the improvements.
The company used these and other findings to develop a LSS approach for use with its suppliers. The key elements of the approach included:
- Specifying a number of annual LSS projects in the contracts of key suppliers.
- The company identified and defined the projects based on quality improvement requirements for its customers.
- A company belt always accompanied the supplier belt to company-led training. Additionally, a project Sponsor from the company and the supplier were named to help break barriers to the project as they occurred.
- The company provided the Master Black Belt (MBB) to coach the belts on the projects for tool use consistency and accuracy and project flow. Often, it was found that the suppliers were too small to employ a full time MBB. This was key given the critical role played by the MBB during the life of a project.
- Because the project was important to the company’s customers, the company decided to provide the training at no cost to the supplier and did not request any part of the financial benefit accruing the improvements made. This approach eliminated arguments about the “real” value of each individual project.
The company saw the number of LSS projects with suppliers rise beyond 10% of the projects done annually. Many quality issues of all types that were affecting the company’s customers were addressed and improved. Additionally, a stronger relationship between the company and its suppliers emerged with the experience gained working together.