Solectron's Lean Adventure

I found an insightful article in Purchasing this morning that shows further evidence that procurement and supply chain are coming closer together. Titled Lean Drives Solectron’s Sourcing the article describes how "commodity teams will become more important as [the firm] moves to Lean production, which began about two years ago. It is relying on suppliers that can help support its Lean initiative ... Solectron has already done more than 1,000 kaizen events with suppliers to identify areas of waste that can be eliminated in Solectron's or the supplier's business processes. Eliminating waste is a key part of Lean manufacturing."

Solectron's lean manufacturing initiatives are changing how suppliers interact with the contract manufacturer. Suppliers must now deliver in smaller quantities at greater frequency than in the past: "A few years ago, Solectron had warehouses which took delivery of large volumes of parts from suppliers. Today, as a result of Lean, Solectron has closed many warehouses and has a "supermarket" on its manufacturing floor where parts are now stored. The supermarket doesn't have as much space as a warehouse so suppliers have to make more frequent deliveries of smaller quantities of parts. Solectron now has 50% of its parts in supermarkets compared to about 15% in 2003."

Solectron's embrace of lean and strategic sourcing in the procurement process is an early example of a global industry leader that is truly examining the total cost of doing business. For some, this might represent a quintessential reading of Spend Management and Six Sigma principles. But most important, it shows how a firm can get the most out every penny it spends. Benjamin Franklin would be proud!

Jason Busch

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