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Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  1 or few sources per item  Partnership (JIT)  Long-term, stable  On-site audits & visits  Exclusive contracts  Low prices (large orders)  Frequent, small lots  Delivery to point of use © 1995 Corel Corp. Few Suppliers Strategy

Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Tactics for Close Supplier Relationships Tactic  Reduce total number of suppliers  Certify suppliers  Ask for JIT delivery from key suppliers  Involve key suppliers in new product design  Develop software linkages to suppliers Results  Average 20% reduction in 5 years  Almost 40% of all companies surveyed were themselves currently certified  About 60% ask for this  About 54% do this  Almost 80% claim to do this About 50% claim this

Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Daimler Chrysler’s Supplier Cost Reduction Effort SupplierSuggestionModelSavings RockwellUse passenger car door locks on trucks Dodge trucks $280,000 RockwellSimplify design/substitute materials on manual window system Various$300,000 3MChange tooling for wood- grain panels to allow three from one die instead of two Caravan, Voyager $1,500,000 TricoChange wiper-blade formulation Various$140,000 Leslie Metal Arts Exterior lighting suggestionsVarious$1,500,000