SUPPLIER DEVELOPMENT: WHAT & WHY?
Supplier Development is an assistance given both technically and financially. It is provided to potential existing suppliers in order to improve quality, due date and/or performance. It offers various benefits like improvement in supply flow and innovation acceleration. It is a process of collaborating with suppliers in order to improve their processes and product manufacturing capabilities.
Successful companies have incorporated suppliers into management decisions and therefore have transitioned from a single firm focus to a supply chain focus. This replaces the past adversarial supplier relationships and is the newest application of relationship management. It identifies strategic suppliers providing critical components and also ensures good partnership and relationship between supply chain members. Suppliers are also expected to add value to the supply chain process and just not simply engage in transactions of the components for sale.Supplier Development can be segmented into 5 functions- 1) strategic planning and risk definition, 2) engagement, collaboration and project management, 3) training and facilitation, 4) continuous improvement and surveillance, 5) quality systems, process and control. Each organization struggles with the late deliveries, poor quality and inadequate responses to problems by suppliers. Supplier Development program aims at achieving lower supply chain cost, increase in product quality, increase in profitability for all supply chain participants, and near-perfect on-time delivery at each point in the supply chain.
These can be achieved by utilizing strategic planning, project management, training and facilitation to leverage supplier expertise.
Most Supplier Development program goals can’t be met by auditing suppliers once a year. To determine whether suppliers have met the quality and on-time delivery goals once a year does not fulfill the purpose of the program. This kind of work can be referred to as supplier checking and verification because supplier development requires much more work.
Suppliers need to be developed the same way employees are. To be successful, companies provide all the training, tools and incentives to their employees. They invest in their employees as great companies are made by great employees. So, to make great supply chains, great suppliers are needed. The program must be aimed at improving the suppliers’ performance by providing them the proper training and also providing information about products, expected sales growth, etc. Lack of information leads into additional costs but suppliers need to be the
extensions to their customers. More the information about the entire supply chain, more profitable they would be and this would lead to a better quality, lower-cost, on-time product.
To reduce cost and lower project risk, one can leverage the supplier knowledge and technology of the commodity to be supplied through Supplier Development with the service provider. Our objective is to identify supplier expertise and initiatives that can benefit the service provider. To shorten the development life cycle and increase velocity to market, there needs to be a strong collaborative relationship between the service provider and their suppliers. The supplier network must be capable enough to provide strategic planning, structure and activities for a strong and capable supply chain. Assessing suppliers to determine risk levels creates a mutually beneficial end result.
For more information visit Our Site: http://www.collectivevaluecreation.co.za/