Hi everyone,
I'm currently conducting a project which focusing on a food industry that adopts Lean & Six Sigma initiatives which mainly to increase productivity and to reduce costs and inventory. Unfortunately, nowadays, the supplier management has got very important role to play in making the products and services being offered to be more competitive. Most of the manufacturers are highly depending upon the suppliers to focus on the core competencies as well as to derive the sustainable competitive advantages. However, while the manufacturers are becoming increasingly less vertically integrated, the control over the total cost of ownership appears to be lost.
Dear Nurin,
The whole point of process optimization in the light of Lean Six Sigma should be that it brings value to the business and the customer. So local optimization wouldn't work in the end. Guess with vertical integration you mean that food manufacturers have less direct ownership of supply chain partners? In any case I read your question as 'how to establish a sustainable base for supply chain integration'? This should always serve mutual benefits for the supply chain partners, which requires in the first place visibility of costs. If you manage to bring the hidden costs to the service and relate them to the operational level of supply chain collaboration, you create the transparency required. Negotiating and competing of shear price is very short term and on the long term often costly. So making apparent where the costs are might help price and service negotiations.
You could look at the SCOR model to define all the operational activities in supply chain integrations. This helps to identify both the metrics and the activities and pinpoints who to talk to about what in the supply chain.
Hope this helps, it is still a tough battle if your vision reaches further than short term economic incentives. Good luck.
Josanne Heeroma, Rotterdam, NL
Hi Farhana,
The main difference between the food industry and part manufacturing industries is the raw material.
You can standardize the raw material easily for part manufacturing and get a steady supply of it from the suppliers and it is nonperishable. Also, you can rework the part
But for food industries, the supplier faces a lot of uncertainty and most of the raw materials are perishable and cant rework the product.
So, your continuous improvement initiatives should be like a project that focuses on farm to fork in an efficient manner and not to focus on the vertical process integration of the manufacturer.
For better understanding refer to carrot production from the baker field, California.
Or the Shrimps export from Malaysia.
You can study supplier selection modeling, and set the criteria you want. Please check the following paper:
Conference Paper Supplier Evaluation and Selection for Logistics Outsourcing:...
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