Supplier Development Programs
In today's business environment where firms become less vertically integrated and relies more on the performance of their suppliers, supplier development can play a critical role for a firm to stay competitive. Supplier development refers to activities made by a buying firm to improve supplier performance. This paper investigates the application of supplier development programs and its benefits. A model for implementation of a supplier development program is presented. The findings in this paper suggest that suppliers with strategic inputs should be prioritized in supplier development. It is also concluded that direct supplier development where the buying firm plays an active role in the development process is more successful than indirect supplier development where the buying firm uses various incentives to make a supplier improve alone. Supplier development may have a positive effect on quality, cost, delivery performance, productivity, product innovation, the relationship between buyer and supplier, work environment and knowledge and competence among employees. Finally it was found that it is important to help the supplier build a culture fo
Examples of quantitative data that should be analyzed are historical supplier production performance data, such as downtime, daily production rates, cycle time, rework rates, and scrap rates. (2000), which all presents step models for supplier development programs, a implementation model for supplier development has been developed. Finally it is also important to help the supplier build a culture for continuous improvements in order to sustain improvement levels even after direct development efforts have been made. (2000) ads increased product innovation to the list of benefits. There are also "softer" and more intangible benefits such as improved supplier - buyer relationship, improved work environment at the shop floor and increased knowledge and competence among employees. , 1997, "Success factors in supplier development", International Journal of Physical Distribution & Logistics Management, vol. , 2000)Benefits of supplier developmentThere are several benefits of supplier development. Initiating major supplier development efforts for the entire supplier base may not be wise since it can be very costly and sometimes unnecessary since returns may be very low. (1993) differs between indirect and direct supplier development. GM has a program called PICOS (purchase input concept optimization for suppliers) where the company sends teams of engineers directly to suppliers to help adopt lean and efficient production methods. The second definition highlights the importance of that the development effort should meet the supply needs of the buying firm.
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