Supplier development
Explore how supplier development can add value to your organisation
What is supplier development?
Supplier development involves the collaboration with your suppliers to improve their performance. It involves increasing capabilities and capacity with your suppliers that will benefit both them and your organisation. This could be in terms of costs, quality of products, time it takes to deliver and any emerging technologies that can build efficiencies and improve customer satisfaction.
Why is supplier development important?
Supplier development is the process of working one-to-one with suppliers to improve their performance. The driving force of supplier development is the competitive pressures in the market today. It’s incredibly risky to change to a different supplier and it involves costs, time, and resources. Taking a current supplier and helping them to develop their performance can add value to your organisation.
Areas of development can include:
- Cost reductions that help to maintain the supplier’s profit margin
- Improvement in quality that reduces defects
- Improvement in lead teams and delivery
- Improvement in environmental performance and sustainability within the supply chain
- Improvement in product training
Supplier development benefits both the supplier and your own organisation. Having an effective supplier development programme in place will help to:
- Increase supplier responsiveness, particularly to change
- Increased customer satisfaction and experience
- Improved quality both of existing and new products or services
- Improved transparency and collaboration with your supplier
- Establish and develop long term supplier relationships which help to mitigate risk within the supply chain
How is supplier development implemented?
Supplier development can take the form of a one-off project or an on-going activity. Simply, it's about giving regular feedback to the supplier on its performance. Supplier development can be a resource-intensive process, which means development should only be undertaken with suppliers from which real benefits can be achieved. The selection of suppliers for development should be dependent on:
- Scale of value and improvement
- Opportunity
- Cost, complexity, and duration of development
- Supplier cooperation
- Risk potential
There is no single approach to supplier development. You must select the most appropriate approach that suits the relationship you have with you supplier. For example, if there are changes in regulations or systems that affect all your suppliers, it may be easier to use the form of a seminar or conference which is more cost-effective.
So how do you raise the issue of supplier development? It’s important that supplier development is raised up front in the tender document. Elements of development can then be included in the contract. For current suppliers, make sure to monitor their performance and feedback any poor results. This can act as a motivation to sign up to a development programme in the future.
What skills are involved in supplier development?
Some suppliers may be resistant to being developed or be unwilling to, which means having excellent communication skills is key to our procurement and supply profession. Look at some of the key skills procurement and supply professionals will need to have when it comes to supplier development:
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Supplier relationship management key themes
What is supplier development?
Supplier development involves the collaboration with your suppliers to improve their performance. It involves increasing capabilities and capacity with your suppliers that will benefit both them and your organisation. This could be in terms of costs, quality of products, time it takes to deliver and any emerging technologies that can build efficiencies and improve customer satisfaction.
Expand your supplier relationship management skills
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