> ... > Intelligence hub Supplier relationship management Early supplier involvement

Early supplier involvement - what are its advantages?

Discover the benefits of early supplier involvement and how to implement it successfully within your organisation

What is early supplier involvement?

Early supplier involvement (ESI) is where the manufacturer involves the supplier at an early stage of the product development process. ESI remains common in the automotive and consumer electronics industries.

The stages of ESI can be broken down into four main components:

  • Design: Conceptualising the product, reviewing sales forecasts, performing value analysis of parts, determining quality targets, and defining the product performance range.
  • Procurement: Decision on specification performance thereby utilising the potential supplier's specialist skills, price negotiation and determining safety stock levels.
  • Suppliers: Improving quality controls at the supplier's factory, determining delivery standards and goals and research and development investment.
  • Manufacturing: Determine the method of manufacture for example, tooling, production efficiencies and batch runs.
 

How to implement early supplier involvement

To successfully implement early supplier involvement within your organisation, an open discussion with the supplier as early as possible is key. Here you’ll be able to utilise their specialist skills and offer constructive feedback. Here are a few basic steps to help you implement early supplier involvement, from initiating an idea to determine the manufacturing process.

  1. Generate an idea
  2. Conceptualise and design the product
  3. Analyse make-buy decisions
  4. Negotiate price, terms, and conditions
  5. Negotiate lead-times and inventory levels
  6. Determine delivery standards and goals
  7. Determine R&D investment
  8. Define and discuss manufacturing process
  9. Determine the manufacturing metrics
 

Advantages of early supplier involvement

ESI can bring significant benefits to your organisation, due to the involvement of suppliers in the initial stages of product development. Utilising IT platforms will help you to improve communication, innovation and helps with the launch process. Here are some additional benefits that your organisation will see when adopting ESI.

  • Adopting ESI helps to manage any risk that comes with developing new products
  • Helps to reduce cost
  • Gain and risk sharing agreements replace traditional negotiations and contracts that are primarily focused on purchasing price and quantities
  • ESI can help establish long-term relationships
  • Integrates supplier capabilities in the manufacturers supply chain
  • Reduced lead times meaning a product can get to market quicker
  • Improved performance
  • Shorter development cycle and lower development costs
 

Disadvantages of early supplier involvement

Although ESI is beneficial and will help you manage the risk that comes with developing new products or services, it does pose a few challenges.

  • Organisations can experience difficulties in managing the process, such as communication problems with the supply chain partner.
  • For the manufacturer, ESI imposes a risk of a possible loss of control over product design.
  • The risk can be high if the manufacturer relies on a sole supplier in the development of a core component.
  • The suppliers' skills may not be what the manufacturer is looking for.
 

How to optimise purchasing costs with the Kraljic Matrix

Use the Kraljic Matrix to help you determine the risk of materials from your suppliers.

Supplier relationship management key themes

Supplier relationship management Managing supplier relationships Supplier in difficulty Performance
Kraljic matrix Optimise procurement costs Supplier risk assessment Procurement Soft Skills

Become a CIPS member

Achieve your potential by becoming a member today. Whether you want to become a studying member or want to upgrade your membership to MCIPS, you’ll receive support and guidance whatever career level you’re at.

CIPS Podcast : Supplier relationship management

CIPS Webinars - Watch the full supplier relationship management playlist here

Access the latest research, whitepapers and tools across a range of key procurement and supply topics.

Supply chain management networks guide

This CIPS paper will help you understand more about supply chain management (SCM) and networks, including how SCM can be defined in different organisational structures.

Suppliers in difficulty guide

Suppliers in difficulty can cause major problems to the supply chain and if not managed correctly can halt operations, stop sales, and even close down organisations. This paper briefly explores suppliers in difficulty and how to mitigate such risks.

How to evaluate suppliers guide

Supplier evaluation is a key skill for supply chain professionals and when correctly applied will mitigate the potential risk of the organisation engaging with poor performing suppliers. Reading this document will give a better understanding of the supplier evaluation process and the potential benefits it brings to your organisation when successfully implemented.

Single vs sole sourcing guide

There are many benefits to single and sole sourcing but there are also risks associated. If managed effectively then it has the potential to reduce costs and improve relationships in the supply chain. This document will provide you with a greater understanding of single/sole sourcing and the potential benefits to your organisation when successfully implemented.

Expand your supplier relationship management skills

Illustration of a person appearing on a laptop screen with a speech bubble, set against a decorative circular background; symbolizing digital supplier relationship management, virtual collaboration, and online communication.

Procurement Skills Training

Accelerate your learning and keep your knowledge and expertise up to date with our Supplier Relationship Management training courses.

SUPPLIER RELATIONSHIP MANAGEMENT TRAINING

On this page