Varian Medical Systems Inc. is the world's leading manufacturer of integrated systems for treating cancer with radiotherapy. Varian technology is used in the treatment of thousands of patients every day -- a responsibility that the company takes very seriously and shares with the 320 members of our supply chain. To further cement the company's long-term partnerships with key suppliers, Varian has developed a program of Value Managed Relationships (VMR).
Rooted in the company's "Partners for Life" philosophy, the VMR program provides 40 of Varian's top suppliers with three- to five-year preferred vendor relationships, which at times include defined and forecasted order commitments. These relationships benefit both parties. Based on the strength and commitment of these relationships, suppliers can upgrade their facilities, hire the workforce, and purchase the necessary equipment to meet future delivery schedules. Varian benefits because such long-term relationships result in improved quality and delivery as well as more cost-effective pricing.
As a manufacturer of medical equipment, Varian is ISO-certified and also regulated by the U.S. Food and Drug Administration. Because the company operates in such a highly regulated environment and is directly responsible for consumer protection, we make certain demands of our suppliers. The regulations and restrictions to which we adhere tier down to our suppliers, and many have to raise their standards in order to comply. VMR suppliers have additional quality responsibilities; they handle the lion's share of parts inspection responsibilities, so these suppliers often have to raise their standards yet again. Since the implementation of the VMR program, defect rates have dropped by 19.5% and on-time delivery performance has risen by 18%. Varian's Quality Assurance group works closely with our VMR suppliers, and the acceptance rate is now greater than 99%, reducing the initial team of 14 inspectors to six.
| Varian Medical Systems Inc. At A Glance |
In March 2005, Varian introduced a dedicated portal on its Web site so that suppliers could investigate transactions, confirm change orders or prices. Once the supplier agrees to a change, Varian's manufacturing system is updated automatically and the results are reflected instantly in the portal. Both Varian and our suppliers have found the portal to be a cost-effective way to improve and streamline communication. Manufacturing forecasts for the 12 months ahead help us all manage our business activities effectively.
In order to achieve our ongoing goal of supplying superior products on time at competitive prices, Varian ensures that everyone who works for its suppliers -- from management to the production line -- is aware that they are part of the process of making equipment that will be used to save lives. This means that the enthusiasm and dedication of our own personnel are also engendered within the supply chain. Individuals can envisage how their particular product fits into the greater goal of cancer therapy, so everyone can feel that they are actually "partners for life."
Securing A Stellar Supply Chain: Only as strong as its weakest link, the supply chain can make or break manufacturers.
Tying Supply Chain To Customers, by Dick Hunter, vice president, Dell Americas Manufacturing & Distribution Operations
Keeping Up With The Times, by Lawrence J. Mosner, chairman and CEO, Deluxe Corp.
Cost Reduction Essential To Competition, by Donna Covington, vice president/customer services, Lexmark International Inc.
