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Implement Supplier Pull

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Initiate a Kanban-based replenishment strategy with Suppliers. Before turning your attention to outside suppliers, make sure that the Kanban system is working well internally. Move slowly and deliberately in bringing Suppliers on board.

Develop KANBAN Plan

Develop a clear plan to onboard suppliers to Kanban replenishment. This is a document that will be shared with outside suppliers, that describes the communications methods, use of forecasts, expectations regarding quality and delivery. This document is used to answer the question: how does the supplier Kanban process work?

Supplier in PFEP Database?

Ensure that the target supplier is in the PFEP database, if not add the supplier. Most of this data will already be completed in the PFEP database. Missing will be specific supplier information regarding distance, quality, certification status. You will also need to make sure that the desired Kanban quantity has been calculated for that Kanban link (stores to supplier or supermarket to supplier).

Sort PFEP By Total Dollars Spent

Multiply the unit cost by the annual usage to calculate total dollars spent for each part number. Sort the list in order to apply the 80/20 rule to your analysis. 80% of the inventory dollars is 20% of the part numbers, for example.

Identify Certified Supplier and Distance

Determine if the target supplier is “certified” and within 1 day (by truck) of the consuming plant. Start with the highest dollar spent. You are doing this to reduce risk of supplier nonperformance, and also to ensure that if material is needed the transportation distance is not excessive. A supplier may be formally certified through a supplier-quality program, or have a track record of high on-time delivery and quality.

Calculate Potential Benefits

Calculate the potential benefits by comparing the actual on-hand inventory to the calculated average Kanban quantity. Do this analysis once a part number has been identified as a candidate for supplier Kanban.

Start Supplier Discussions

Begin discussion with the target supplier, if the benefits are worth pursuing. Share with them the Kanban plan created previously. Let them know that this is an important initiative.

Supplier Agrees?

If the target supplier agrees to the terms, lunch a pilot Kanban replenishment program, if not start looking for alternate supplier for the part. This process will take some time. A recommended approach once a supplier has agreed to participate, would be to include all items that are procured from that supplier. Otherwise apply the Pareto Principle and proceed down the list in order of dollars spent.

Yes | Launch Pilot Program

If the target supplier agrees to the terms, lunch a pilot Kanban replenishment program, if not start looking for alternate supplier for the part. This process will take some time. A recommended approach once a supplier has agreed to participate, would be to include all items that are procured from that supplier. Otherwise apply the Pareto Principle and proceed down the list in order of dollars spent.

Repeat For Next Suppliers

Continue working on the next target supplier. This is likely to be a never-ending process, as some suppliers that make the cut today, may not make it tomorrow and vice-versa.