A Welcome Message to our Valued Supply
Greetings to Sensata's Supply Chain partners. As we work together, the key to our success will be keeping our initiatives simple and succinct so we do not burden ourselves with overly complex solutions. With that in mind, I want to keep us focused on continuous improvement in three key fundamental areas that I am sure you will agree are equally important to your business -- Quality, Cost and Delivery. Allow me to articulate some of my thoughts about these three basic concepts.
Quality – While there are many ways of defining quality, in the simplest terms, we are talking about world-class excellence. In the supply chain, this means being able to meet the needs of our customers who, in many cases, are looking for Sensata to achieve zero parts per million defects. This is no easy task, but it also helps you and us by driving unnecessary cost in the form of defective material out of our operations. If we work together as partners in striving to reduce our defects and improve our quality to this level, we all stand to gain.
Cost – Simply put, our customers demand cost reductions for Sensata to maintain/grow our market share. The benefit of lowering cost to both of us can be more volume and ultimately revenue and profit. We need to work collectively to find a solution that reduces cost to meet the needs of the end customer. We need to do this in an atmosphere of mutual trust that recognizes the need to maintain a defendable profit position. I’ve challenged my teams to approach this with an open mind and creativity. Several of you have already accepted this challenge and are presenting alternative solutions to Sensata for cost-reduction ideas. I look forward to working with more of you in this area.
Delivery – Impeccable on-time delivery performance is a necessity for our business. Continued missed dates force us to correct this matter with excess inventory in the supply chain either at your facility or Sensata’s -- a cost none of us wants to bear. The Japanese word for this is “muda.” Translated, it simply means “waste” which, in turn, means additional cost in the supply chain. In this environment, none of us can tolerate this additional cost. Therefore, it is critical that you adhere to our delivery needs and drive to 100% on-time delivery performance. I expect that you will want the same from your own suppliers. Tightly connected to delivery is your respective lead time to us. To meet our customers’ delivery and responsiveness requirements, lead times will be challenged to further drive efficiencies across the supply chain. My team is tasked to find cost-efficient methods to bring all lead times within a 2-3 week window across the entire Sensata’s supply base. Please note that while some raw and/or semi finished good inventory may be necessary in your supply chain to achieve this objective, increased inventory will not be the only method implemented. Careful examination of your supply chain and processes may be necessary to address this objective.
As you can see, my approach is to emphasize some basic and fundamental building blocks. However, that is not to say addressing these fundamental issues with a drive for continuous improvement will be easy. Nonetheless, I encourage you to accept this challenge because your performance will be measured in these fundamental areas and rewarded accordingly. In fact, Sensata has already begun measuring supplier performance in these areas. Going forward, “QCD” will become our ruler for measuring our collective performance and will also be used to determine subsequent business awards. These fundamental areas are being implemented into Sensata’s new supplier performance management system with real-time and quantitative data being input into a new supplier scorecard called iScore. Further details of this scorecard will be provided to you via our business contacts.
In closing, I look forward to your continued support and engagement with us on these initiatives. I encourage you to take charge of these initiatives inside your respective companies because they will help drive continuous improvement within both our businesses. Please accept this open invitation to provide any suggestions and opportunities that you feel would offer improved solutions to the Sensata team. I look forward to partnering with you on these fundamental and very important business objectives.
Vice President, Purchasing
Sensata Technologies, Inc.