ABSTRACT
Firms that have begun to convert to the lean philosophy of single-piece flow must at some point convince their suppliers and customers to adopt it as well. Only when the entire supplier network has become lean will the full benefits of the lean approach be realized. The firm must take eight major steps to develop an effective interorganizational cost management program. The first four steps are: Identifing the parts of the product that are going to be sourced externally, determining the appropriate level of the buyer-supplier relationship for each externally sourced item, rationalizing the supplier base and developing appropriate buyer-supplier relationships. The next four steps are: Increasing the efficiency of the buyer-supplier interface, developing the necessary skills in the techniques of interorganizational cost management, extending lean supply and interorganizational cost management both upstream and downstream in the value chain and extending lean supply and interorganizational cost management to internal suppliers.
