Supplier Development: Refreshing the Basics

Within procurement, supplier development, especially across a broader supply base (rather than select, strategic suppliers or those in crisis), typically gets short shrift. One of the fundamental challenges of supplier development is that the ownership and responsibility often falls across multiple parties -- category owners/managers, buyers, materials managers, supply chain/operations, manufacturing, and, of course, third parties such as supplier audit firms acting on behalf of a procurement organization. In such a quick analysis as this, it would be impossible to go into details about the intersection of supplier development with supplier performance management, but as anyone involved in such programs knows, putting information and measurement at the core is an absolutely critical foundational element.

If you're looking to refresh your knowledge of supplier development, this AT Kearney article, reprinted from Supply Chain Management Review, is a quick-hit primer. Given its short length, the article does a good job with the basics, including overall program design and even a sample audit scorecard. But more important, it helps place supplier development in context.

Consider that, "Historically, most mid-size and large companies have had some type of supplier development program, which typically included a supplier certification program. It was common for companies to conduct on-site audits and implement performance improvement plans. In recent years, however, with the advent of more sophisticated technology and intense cost-cutting pressures, many companies have diluted their supplier development activities. In fact, in many cases they no longer require on-site supplier audits."

This has resulted, according to the authors, not only in lost opportunities to foster relationships with suppliers (new and old), but also in an increased level of supply risk. As they say in parenting, face-time (not just quality time) matters. So too in supplier development! The good news is that suppliers are at least somewhat fungible. In contrast, the switching costs of children, should their homework PPM levels increase past a certain point even after a joint kaizan event/intervention, are a bit too exorbitant.

Pardon the digression on such an important topic. But if you need a refresher on supplier development, do check out ATK's refresher.

- Jason Busch

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