Supplier Development initiatives aim to significantly and sustainably improve the operational performance of suppliers in terms of cost, quality, and time.
Context and challenges
This deliberate approach is generally embarked on as part of the deployment of a company's strategy, based on the expertise and skills of the panel of partner suppliers.
Having spent a number of years focusing on the performance of their own operations, manufacturers are increasingly outsourcing activities or functions that they do not deem strategic to suppliers and subcontractors who are recognized for their expertise in those domains.
A large part of value creation is entrusted to suppliers, typically in industries such as automotive or aeronautics. The share of outsourced value may account for up to 80% of added value.
Manufacturers are therefore justified in wanting to control their suppliers' value chain by selecting them carefully, regularly assessing them, and managing their performance with the assistance of the right applications and methodologies.
If results do not live up to manufacturers’ expectations, they have three options:
1. Bringing activities back in-house, which is often difficult, if not impossible, due to the loss of the required resources and expertise, not to mention financial issues
2. Changing supplier, which is often a long, costly, and risky process with no guarantee of success
3. Helping the supplier to improve its performance and achieve sustainable progress: the very purpose of supplier development
In general, supplier development projects focus on three areas simultaneously:
1. Helping the supplier to improve the performance of its operations by providing methodologies, applications, and coaching to teams
2. Improving all customer/supplier interfaces by implementing the most effective collaboration methods, governance, and shared performance indicators
3. Implementing shared benefits and risks systems based on measureable operational performance targets
There can be multiple benefits for suppliers who participate in these supplier development projects: acquiring new expertise, improving quality, optimizing their supply chain for the customer in question and potentially for their other customers, securing business, etc. This results in benefits that can be shared with the customer.
How can Argon Consulting help you?
- Identifying priority suppliers
- Analyzing failures and potential benefits
- Managing and implementing progress plans and the related benefits