“Quality is Job One” from Ford Motor Company was one of the more famous slogans that many consumers were aware of because of the extensive advertising campaign. The advertising campaign is the face of an earnest effort by Ford to improve product quality as well as communicate its seriousness about quality to consumers.
For Supply Chain teams that work with Suppliers the slogan might as well be “Supplier Development is Job One”.
The most straightforward arguments for supplier development were made in the following
- Building Deep Supplier Relationships – Jeff Liker and Thomas Choi – Harvard Business Review
- Supplier Development at Honda, Toyota and Nissan
In a situation like the current semiconductor shortage which is likely to last for up to 2 years, being a preferred customer is advantageous and will figure prominently when suppliers resort to allocation and prioritization.
Supplier development is broadly seen as a strategy as well as a set of activities to improve supplier’s capabilities and performance to meet buyer’s short and long term supply needs. Supplier development can incorporate many elements depending on the program need and relationship scope, including
- Financial support (facility expansion…)
- Capital investment (tooling, machines, etc.)
- Training and implementation of quality tools
- Resource commitment (primarily design, engineering and supplier quality engineering)
- Supplier performance assessment and continuous improvement
- Recognition and reward systems
- Long term supplier relationship management
Given the above level of commitment in terms of resources, time and money it is only natural for buying companies to ask ” What is in it for me? (aka “Business Case”). Fortunately, the answer for that question can be found in the research as well as industry survey conducted Daniel Kruse and Dr. Handfield.
The role of Supplier Development is also emphasized in New Product Development by Lawson, Krause and Potter. Helping suppliers develop New Product Development and Launch capabilities allow buying companies to indirectly benefit from Supplier’s innovations and innovation capabilities.