What is the value of Lean Six Sigma in Vendor Management ?

Thanks for posting that question. 

 

Use of Lean Six Sigma in Vendor Management varies as per Industry and roles assigned to Vendors. Here are a few examples 

 

• Vendor Management in Automotive and Aerospace sector is a crucial area and the function is named as Supplier Quality Assurance. The expectations are high and engagement is deep and regular. We have worked with Boeing on APQP, a program that is focused on quality assurance through the entire supply chain. 
• Vendor Management in an FMCG or Pharma Sector involves much lesser engagement with a specific vendor but their is rating on Quality and Delivery for all vendors. There is special focus on Raw Material and Packaging vendors as the impact of their operations is large and evident. We have worked with companies like P&G. 
• Vendor Management in IT and Service Sectors is dependent on extent of involvement. The involvement is very high in Vendor Managed Operations (VMO). The vendor managed operations (mostly support services) are utilized by large organizations like Google. We have engaged with Google and have delivered a program on VMO. 

 

Overall, Lean Six Sigma (DMAIC) is heavily utilized in all the above situations.

 

As an example, an outline of DMAIC applicability in VMO for IT and Services is shown below. The table also shows all the elements that are essential to make the Vendor Managed Operations successful. 

 

 

Sec	Clause Description	Lean Six Sigma Relevance for Vendor Managed Operations
1	Leadership and Planning
1.1	Statement of Direction	(PROJECT SELECTION)
1.2	Business Planning	(PROJECT SELECTION)
1.3	Target Setting	(DEFINE)
1.4	Reviewing Business Performance	(MEASURE)
1.5	Responsible Sourcing
2	Processes
2.1	Defining Requirements	Passing Reference (DEFINE)
2.2	Developing and issuing RFX	(MEASURE)
2.3	Selecting and contracting OSP’s
2.4	Implementation and Change Management
2.5	Closing Relationships and Programs	Passing Reference
2.6	Reviewing OSP Performance	(MEASURE ad ANALYZE)
2.7	Paying OSPs	(MEASURE and Analyze)
2.8	Reporting Performance to Clients	Passing Reference (MEASURE)
2.9	Gathering and Analyzing Customer Feedback	(MEASURE)
2.10	Design of Key Customer Related Processes
2.11	Knowledge and Content Management
2.12	Quality Management	(DMAIC)
2.13	Sales Management
2.14	Forecasting and Capacity Planning	(MEASURE)
2.15	Scheduling and Real-Time Management
2.16	Training and Verifying OSP Staff Skills	(DMAIC)
2.17	Customer Service Support Staff -Monitoring and Coaching
2.18	Unassisted Channel Management
2.19	Managing Process Control	(CONTROL)
2.20	Corrective action and Continuous Improvement
2.21	Data Privacy and Compliance	(MEASURE, ANALYZE)
2.22	Business Continuity
2.23	Reporting and Data Integrity	(DMAIC)
2.24	Vendor and Key Supplier Performance Management	(MEASURE)
2.25	Annual Review	(MEASURE)
3	People
3.1	Hiring and Recruiting	(DMAIC)
3.2	Training and Development
3.3	Managing Staff Feedback	(MEASURE)
4	Performance	(DMAIC)
4.1	Measuring Customer Experience	(DMAIC)
4.2	Client Satisfaction and Dissatisfaction	(DMAIC)
4.3	OSP Satisfaction and Dissatisfaction	(DMAIC)
4.4	Overall Cost Management	(DMAIC)
4.5	Key Business Process Performance	(DMAIC)
4.6	Key Support Processes Performance	(DMAIC)
4.7	Achieving Results	(DMAIC)

 

While I have highlighted one example, it is possible that you are referring to a different Vendor Management set up.  

 

Please feel free to ask questions relevant to your Industry and personal role. I will be happy to respond.