May
26
Kyoryoku Kai is, as the name suggests, a Japanese phrase that is used to describe any supplier association or groups of suppliers’ associations. A supplier association is used within the Lean business philosophy. In effect it is a group of the most important or vital suppliers to any particular company, who work jointly and together to develop more efficient supply methods with a base line aim of reducing production costs.
The concept originated within Japan and was and indeed still is used within the Toyota Production System. It has taken some time to develop and then refine these associations, some 50 years in the case of Toyota, but it is a strategy that offers tangible reward.
Structure of Kyoryoku Kai
Within any Kyoryoku Kai membership can be either direct or indirect suppliers. Although this may seem odd, can be important to include indirect suppliers sometimes, simply because they may be able to give input about parts they supply to other direct suppliers and how they interact or interface with each other.
Usually there are various levels of Kyoryoku Kai, with a very senior management team overseeing the whole framework. Then there may be an executive level, with a regional or more local section below that. Each level has more members, so the local or regional sections are the biggest.
Joint Working In Practice
In practice, the process of working together is much less daunting than it may seem to potential members. The Kyoryoku Kai facilitates for members to work on the basis of co-operation and trust, so members do not have to worry about other members being able to gain a competitive edge over them.
Detailed Objectives of Kyoryoku Kai
Although the overall aim of Kyoryoku Kai is to drive down the costs of production, there are several other objectives, all of which are important.
• Use the Kyoryoku Kai to make sure that waste is eliminated from all aspects of the supply chain, simply through increased communication between suppliers and the customer.
• Create a stable supply chain. The Kyoryoku Kai can ensure that the supply chain is made secure and less volatile than if the suppliers are simply left to work independently.
• Share best practices – facilitate sharing best practice and efficiency throughout the supply chain.
• Speed up the production process. Through a more stable and secure supply chain, combined with suppliers working together there can be less operational hold ups in the production process, because the ‘flow’ of supplies is not interrupted at any stage.
• Supply feedback to the customer. This is important because the supplier can actually help the customer do things slightly differently, in a manner that is more cost effective or more productive. It also highlights the way that the Kyoryoku Kai is a two-way process and this is fundamental to its success. If the Kyoryoku Kai is to succeed the customer has to listen to what the suppliers say. It is not a means whereby the customer can dictate to suppliers; this is a dialogue, not a monologue….
May
26
Supplier development strategies are long term activities undertaken jointly by both the supplier and the buying organization. The development can cover a variety of facets, from improvement activity (i.e. improving delivery performance) through to aligning product or service requirements.
Supplier development doesn’t occur with all suppliers, typically development activity will occur with suppliers that are being retained (consider the application here of your supplier evaluation system where often suppliers will fall into the categories or maintain, develop or exit). The development activity is usually tailored to meet the needs of the buyer, but it’s often a mutually supportive activity which forms part of the ongoing relationship.
The Supplier Development Review
Supplier development reviews are a key step within the supplier development process. Reviews are carried out to:
a) Review business issues / problems;
b) Ensure performance is aligned with requirements
c) Monitor ongoing projects/initiatives
d) Share information and business strategy
Meeting Targets
Any supplier development strategy will have identified key targets that need to be met and the supplier development review is an opportunity to see whether or not these are being attained.
While this may sound negative supplier development programs are designed to be constructive and in determining the route cause of the problem, collaborative improvement plans can be deployed. It should be remembered that development targets set need to be realistic, unfeasible expectations do not usually foster supportive relationships!
Identify Areas For Support
The review will also offer the chance for the supplier to highlight any way in which the customer can support them. For example, your review may indicate a poor understanding of requirement, improved demand signal, access to specification documents etc.
Remember that the review is an opportunity for both parties to indicate how they are finding the relationship and whether it can be improved.
Without a review there is no constructive element to the relationship and it is almost bound to flounder; so the review is essential to ensuring a positive, constructive and perhaps most importantly, a lasting relationship between supplier and the customer!