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19th Annual Conference of the International Group for Lean Construction - Lima, Peru - 2011

In Search of Lean Suppliers - Structuring a Preferred Supplier Program

Jan A. Elfving¹ & Glenn Ballard²

¹Ph.D, Head of Nordic Procurement Unit at Skanska. Paciuksenkatu 25, 00101 Helsinki, Finland, Phone +358 40 738 6100, [email protected]
²Professor, Civil and Env. Engineering. Department, and Director of the Project Production Systems Laboratory (p2sl.berkeley.edu), 215-B McLaughlin Hall, Univ. of California, Berkeley, CA 94720-1712, USA, Phone +1 415/710-5531, FAX 510/643-8919, [email protected]

Abstract

The lean literature emphasizes that one should involve suppliers in early stage decision-making, work cross-functionally, and long-term. Simple principles but how does one put this into practice in more than 2000 construction projects in multiple countries and with 26,000 suppliers? This paper proposes a model for building a long-term preferred supplier program. The specific objectives of the paper are: 1. To describe a model for a preferred supplier program, for both goods and service suppliers, in development within an international construction firm. 2. To explain the theoretical foundations and design choices involved in the preferred supplier program. The model is developed theoretically following the current state/future state methodology for process improvement. Proactive management of supplier relations goes beyond simple ‘buy for less’ or ‘select the best’ strategies. Grounded in the realization that competition is increasingly between production systems (supply networks) rather than individual companies, an adequate preferred supplier program reduces costs by eliminating waste and increases capabilities by developing skills and processes. The model provided in this paper fills a critical gap in knowledge.

Keywords

Lean, supplier, supply chain management, preferred supplier program

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