Company Loses Million Dollar Account

A large Saskatchewan metal fabrication company was well into a Lean Enterprise transformation and was buying $1 million/year of product from a particular supplier. The supplier produced parts using a combination of in-house and 3rd-party fabricators with considerable transportation of work-in-process between their facility and others and back.

As part of their supplier development process, the customer tried to convince them to examine their processes and get rid of all this transportation waste (one of the Seven Lean Wastes), so they could reduce lead times and reduce costs. They were willing to share the savings, but needed supplier improvement to help them meet their own customers' ever-more-demanding requirements. Unfortunately, the supplier wasn't willing to explore Lean, and repeatedly told the customer that their processes were efficient enough.

Another supplier, eager for work, was willing to embrace Lean improvement initiatives and accept the offered supplier development assistance. As a direct result, the first supplier lost $1 million/year in profitable business.

This is what is happening around the world. If you're not willing to embrace continuous improvement and Lean, you can bet someone else will. And they will beat you on price, quality, and delivery time. Can you afford to lose your million dollar accounts?