Supplier Development Process
Step 1: Identify Critical commodities for development ( valuable)
To develop assessment & spend analysis to analyse the importance of all purchased goods & services
When needed supplier development**
the purchased products account for more than 50% of product value
Treat supplier as partner
supplier acts as the source of competitive advantage
Require suppliers to be more responsive
To identify where to focus for supplier development effort
Step 2: Identify critical suppliers for development
Supply base performance assessment system help to identify suppliers needed for development
Bench marking & Pareto analysis used to identify targets for development
If supplier's product is essential to buyer
supplier meet min. requirement but not yet achieve world-class performance
Step 3: Form cross-functional development team
to support & initiate the development
members
engineering
Operation
Quality
Purchasing
Employees of supplier
Step 4: Meet with supplier's top management team
To establish strategic alignment between companies
To set up measures objectives for development project assessment
to develop mutual trust & commitment
To foster 2 way communication
Step 5: Identify Opportunities & Probability for improvement
To identify key areas for improvement
Driven by final customers' requirements & expectations
Focus on long-term of improvement with high chances for sustainable success
Step 6: Define KPIs & Cost-sharing mechanism
To outline the measures criteria & improvement goals
To agree on how to share the costs & benefits from development project
Step 7: Reach agreement on key projects & joint resource requirements
To refine measurement in details ( in term of %)
To specify the role of each party to responsible for the project
To determine the allocation of resources
To specify manner & timing for deployment of project
Step 8: Monitor Status of projects & Modify strategies as appropriate
monitor & ensure open, two way information exchange
May need to modify original plan, add on resources, develop new information, refocus priorities