A few years ago I was in the midst of implementing Lean Manufacturing principles in a Tool and Die job shop. One of the steps in the process involved taking rough-cut blocks of steel and machining them to various sizes. One of the first opportunities we discovered was that our supplier had a wide variation when it came to how much "extra" steel they would send us on the raw blocks. Even though we only paid for the "required" size, the extra steel meant wasted time on our machines and higher cutter costs.
We invited our supplier in to explain the situation and ask them what they could do to help. The representative agreed to help us by tightening up their tolerances. And he even thanked us for bringing the additional material to his attention. Because we only paid for what we ordered all the extra steel they sent represented additional material and shipping costs to them. He even went so far as to offer to "take back" any block that came in over spec.
Almost immediately we noticed a significant reduction in the time required to machine the raw blocks of steel. A few less millimeters of steel per side, times 6 sides per block, times several hundred of blocks a day made a big difference.
Then one day I was called out to the shop to look at a couple of blocks of steel that had just come in. At first the operators had been confused when they could not match two large blocks of steel to the Bill of Material. Then they figured out that instead of sending us two five-inch blocks of steel, the supplier had mistakenly sent us two 10-inch blocks of steel.
My Purchaser said he had called the supplier who had acknowledged their mistake. He went on to proudly tell me that the supplier had told him that rather than pay to ship the heavy blocks back we could "keep the extra steel free of charge" to use on another job. That worked out to almost $1,000 worth of free steel.
I instructed my Purchaser to "call the supplier and have him please take it back."
Why? Try to think of at least three reasons.
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