It takes a Supply Chain to design, engineer, make, deliver, sell, support, service and continuously improve products and services. It only makes sense to have the supply chain be able to closely and digitally work with your organization in an end-to-end fashion.
The presentation below provides our perspective on Supplier Development Lifecycle and the ways you can effectively support and improve supplier performance.
Supplier Development Lifecycle
- Need for a New Supplier
- Supplier Evaluation, Selection and Contracts
- Product/Service Development Collaboration
- Supplier Development
- Operational Collaboration
- Supplier Assessment
- Supplier Development
- Ending the Relationship
All Purchasing is Not Equal
There are many ways to categorize purchasing and organize supplier relationships. One such categorization is give below.
Strategic
- Right supplier is key to program/company success
- High Value
- Complex Specifications
- Quality and timeliness are essential
- Cross-functional collaboration needed
Non-Strategic
- Not essential for program/company success
- Specifications are not complex
- Supplier selection is simpler
Routine
- Low value and standard goods
- Specified good and agreed price
- Streamline ordering and payment procedure
- Use of E-Commerce
Fictitious Example – Apple Supplier Development Strategy
Different Supplier Development Strategies for Different Types of Suppliers
Strategic
- Analysis of Product / Company Strategy and Supply Chain Need
- Supplier Research
- Supplier Evaluation and Selection
- Memorandum of Understanding (MoU)
- Product/Service Development Collaboration
- Supplier Development
- Operational Collaboration
- Supplier Assessment
- Supplier Development
Non-strategic
- Supplier Research
- Supplier Evaluation and Selection
- Contracts
- Product/Service Development Collaboration
- Operational Collaboration
- Supplier Assessment
- Supplier Development
Non-strategic
- Supplier Selection
- E-Commerce/Procure-to-Pay
When a New Supplier is Usually Needed
The need for new supplier(s) can arise for any number of reasons. The most common reasons are the following
- New product/service development
- Expanding into new markets
- Selecting alternate suppliers
- Poor performance by current suppliers
- Ending a contract with existing supplier
- Outsourcing internal activity
Evaluating and Selecting Suppliers
Evaluating and selecting suppliers requires a multi-faceted analysis and often varies based on the need. The facets include
- Product Technology
- Process Technology
- Cost
- Quality
- Service Level
- Joint R&D Capability
- Company
Working with Suppliers on a day-to-day basis
Depending on the type of supplier relationship the day-to-day collaboration with suppliers can include one, more or all of the following
- Order Placement
- Collaborative Product/Service Development
- Collaborative Forecasting
- Purchase / Manufacturing Order Collaboration
- Supplier Quality Engineering
- Supplier Assessment / Supplier Development
Supplier Performance Assessment
Supplier Performance Assessment is a multi-faceted analysis that can incorporate different aspects of the relationship and importance.
Supplier Development
Supplier Development is a business strategy that is the basis for an integrated supply chain. Many leading companies support Supplier Development by dedicating significant time, money and resources. Below are some case studies that highlight the extent to which industry leaders go to support Supplier Development.
- Supplier Development at Honda, Toyota and Nissan
- Building Deep Supplier Relationships – Jeff Liker and Thomas Choi – Harvard Business Review