Levers for improving supplier development
Productivity
Working
capital
Logistic and
planning
Quality
Product and
specifications
1
Productivity
Levers
Themes
Initiatives
Production
• Joint S&OP
planning e.g. sharing
of forecast
• Batch size
optimization e.g.
using VMI
• Minimise down
time e.g. timely delivery
• Reduce change
over e.g. use of standard
material
Production
• Reduce scrap e.g. by
improved quality, see also
“7 types of waste”
• Increase volume e.g.
more sales if lower unit cost
• Avoid redundant
processes e.g. in and
outbound control
• Investments e.g.
possible if stronger
customer commitment
Administration
• Process
optimisation e.g.
common standards
and correct master
data
• IT integration
e.g. on order and/or
invoice
Governance
• Organisation and
mandates incl.
escalation of issues
• Collaboration
policies incl. process
for continuous
improvement
• Alignment on
goals and shared
KPI’s
• Joint Risk
Management
2
Quality
Levers
Themes
Initiatives
Level of quality
• Avoid over
engineering e.g.
on tolerances
• Common
standards e.g. on
quality level
• Transportation
requirements
e.g. on temperature
QA/QC
• Reduce excessive
control e.g. level and
placement of control
• Right level of
tracebility e.g. if
recall
• Use correct
analysis methods
e.g. knowledge transfer
CSR
• Shared code of
conduct
• Compliance gab
and actions e.g.
on safety and
environmental
• Traceability in
supply chain
Governance
• Organisation and
mandates incl.
escalation of issues
• Collaboration
policies incl. process
for continuous
improvement
• Alignment on
goals and shared
KPI’s
• Joint Risk
Management
3
Products &
specifications
Levers
Product design &
redesign
Themes
Initiatives •
(Re) design to cost
e.g. standard material
selection, lower cost
substitution, recycling
• (Re) design for
manufacturing e.g.
lower change over time and
scrap reduction
• (Re) design for
transport e.g. doublet
stacking
Product design &
redesign
• (Re) design for
value e.g. commercial
differentiation
• Mass
customisation
• Make/buy business
case & decision e.g.
use BOM
Process
• Early supplier
involvement
• Common ECO
process
• Common
standards e.g. on
product specifications
and certificates
Governance
• Organisation and
mandates incl.
escalation of issues
• Collaboration
policies incl. process
for continuous
improvement
• Alignment on
goals and shared
KPI’s
• Joint Risk
Management
4
Logistic and
planning
Levers
Planning and
control
Themes
Initiatives •
Joint S&OP process
incl. sharing of forecast,
capacity and manning
• Differentiated
service level and
lead time on ABC
products
• Move push/pull
upstream by changing
trigger for
• VMI/Consignment
stock
Planning and
control
• Increase flow and
reduce lead time in
supply chain by
aligning batch size and
pace for supply of materials
into production
• Ensure correct
master data incl.
correct parameter setting
in ERP systems
Logistic
• Joint planning
e.g. factory pick up
• Transparency in
transport cost
and TCO
• Transport
optimisation e.g.
double stacking, filling
rate
• Logistic
optimisation e.g.
correct labeling, units
customised to
warehouse
Governance
• Organisation and
mandates incl.
escalation of issues
• Collaboration
policies incl. process
for continuous
improvement
• Alignment on
goals and shared
KPI’s
• Joint Risk
Management
5
Working capital
Levers
Stock reduction
Themes
Initiatives •
Joint S&OP process
incl. sharing of forecast and
agreement on stock level
• Increase forecast
accuracy e.g. fix MRP
noise that create to high
purchase demand
• Parameter tuning
on safety stock, order
quantity, service level
Stock reduction
Customer and
supply outstanding
• Capacity
reservation instead
of stock building
• Improving timeline
from invoice to
payment e.g. by stop
• Housekeeping, clean
and unnecessary control
processes
up dead stock
• Reduce/remove
excessive stock e.g.
both parties holding safety
stock
• Correct invoices for
faster payment
and/or automatic invoice
approval
• Optimise payment
terms e.g. by using
reverse factoring
Governance
• Organisation and
mandates incl.
escalation of issues
• Collaboration
policies incl. process
for continuous
improvement
• Alignment on
goals and shared
KPI’s
• Joint Risk
Management
6