Start with No Win Deals

In the old days, when I watched Toyota sensei help their suppliers with quality issues, the first question they’d ask was: “have you checked the materials?” Or “can we see your ordering pattern?”

It always wrong-footed everybody. In a worldview where you inspect quality out of the process by spotting and binning wrong parts, you start your quality analysis with the delivery end, final inspection – the idea that you’d start by checking supplier conditions was both common sense and completely unexpected. Still:

• If your operators have to cope with bad components or uneven materials, how can they make good parts? Or be productive?
• If suppliers have to cope with unreasonable demands and variable orders, how can they deliver quality on time? If they can’t make a decent living, neither will you.

This, as many other pragmatic lesson, seems to have been well forgotten. Suppliers are an integral part of the – you guessed it – supply chain. Flow of value, actually. If suppliers struggle, you struggle.

In comes purchasing: Let suppliers struggle, as long as purchasers meet their objectives and make their bonuses.

When you look into key supplier partnerships you can immediately spot the No Win deals:

1. There is no space to win once you’ve signed the deal – it can’t be achieved, and all present know it.
2. The process is such that you can’t win there either. You can either choose not to show up or to shut up.

The beauty of the No Win Deal is that your own people who have put the package together can say that if the deal turns bad, they’ve done all they could – look, the partner is not living up to their end of the deal. No matter that the outcome of a supplier defecting is just as bad for your own delivery to your own customers than to the supplier, your guy can say: hey, I’ve delivered the output you’ve asked of me – don’t blame me for a poor outcome.

And the irony of the No Win Deal is that… everyone knows about it. And I mean everyone. But, hey, failure is expected, let’s polish our storytelling and see who is left standing at the next round of musical chairs.

A secret to success in lean thinking is that your success depends of your friends’ success. They succeed, you succeed. They lose, you lose. A good place to start to think lean and spot mud in order to change the misconceptions and improve is recognizing No Win Deals when you come across them, getting people around the table and involving partners in presenting their part of the story and how they would have structured the deal – understanding doesn’t mean agreeing, it’s a starting point.

Genchi genbutsu is about going to the workplace and forging a consensus on problems we need to solve together in order to face our wider challenges. Consensus on what problem we’re trying to solve is absolutely key with suppliers and partners. Writing up your own constraints as a spec and forcing it onto them deprives you of their expertise, know-how, intelligence, and more importantly, willingness.

As a starting point to thinking lean, start recognizing No Win Deals for what they are, and tackling them internally before imposing them to your partners. That’s a No Lose Suggestion.