Continuous improvement projects - suppliers hide them to avoid cost rebates

What is your experiences in dealing with suppliers that you know they make continuous improvement projects, you can see the improvement, either on quality or in productivity (or both), but they donĀ“t share the official numbers to be counted as cost reduction in the products they sell to you?
How to make them show their results?
Frankly speaking, the only way I see is based on competitive tension, where other player is fairer than the first one, and the procurement team drives demands to the other supplier.
Appreciate your thoughts. Thanks!

3 Replies

Hi,

Yes working with few suppliers can lead to such hiding behaviour, where you have multiple options then there can be competitive cost reduction you can expect , also arriving at a bench mark cost on par with market can help you to identify the suppliers cost reduction efforts.

This needs some market research and analysis without having data base difficult to arrive the bench mark cost.

Duke Okes
214 Posts

Did your organization contribute to that improvement in any way? If not, I'm not sure they have an obligation to share the results. If they're still competitive with other suppliers, then they have a right to use their gains for their own strategic/operational initiatives.

Continuous improvement projects - suppliers hide them to avoid cost rebates

I understand the drive to cut cost and share the savings. But my question would be if a supplier incurred additional cost to produce a product would your organization share be willing to incur additional cost to share the added burden?