Partners For Life

Partners For Life

Varian Medical systems' "value managed relationships" program helps foster long-term partnerships.

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.

Tim Guertin, president and COO, Varian Medical Systems Inc.
Varian and each of the supply-chain partners review and reassess their relationships on a periodic basis to ensure that it still serves both parties and that suppliers remain competitive and effective. Typically, suppliers turn over no more than 35% of their manufacturing capacity to Varian products. Many key suppliers have continued their relationships with Varian throughout the 15 years the VMR program has been in place.

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
As part of the VMR program, suppliers sign a non-disclosure agreement that makes it possible for them to attend design and development meetings at the drawing-board stage. Quite often, suppliers are able to use their expertise to provide suggestions that reduce manufacturing costs and improve product quality and efficiency. Varian and its suppliers consider this process an effective form of concurrent engineering.

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."

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