Question

Briefly discuss vendor relations in lean systems in terms of the following issues: (a) Why are they important? (b) How do they tend to differ from the more adversarial relations of the past? (c) Why might suppliers be hesitant about JIT purchasing?

Answer 1

(a): Vendor relations is highly important in case of lean systems. This is because of the fact that in a lean system there is no room for disruption of flow of work and in case there is a supply of poor quality or low quality goods from the vendor then it will cause problems and disrupt the system. On the other hand when vendor relations are good then the vendors can easily be trusted to supply high quality goods on a regular and consistent basis and this will also eliminate the requirement of inspecting the incoming goods.

(b): Vendor relations in a lean system tend to be different from the adversarial relations in the past in the sense that in a lean system the relation is based on value stream mapping. Secondly there is a clear environment of trust and as such the relation helps in building and sustaining the necessary conditions for mutual success of vendors and the company. This is in contrast to the case of adversarial relations in the past in which no conditions for mutual success exist.

(c ): Suppliers might be hesitant about JIT purchasing because of the fact that in cases of JIT purchasing the suppliers will have to adhere to extra requirements and JIT criteria being imposed by the buyer. This will lead to increased costs as well as increased level of complexities for the suppliers. Suppliers are also hesitant because in case of JIT purchasing price becomes a secondary factor to other aspects of relationship and supply terms.