The modern business relies heavily on its suppliers. That makes it important to ensure your suppliers continually improve – and that’s exactly what supplier development is all about.
Supplier development is about working with your suppliers to boost their performance and build strong partnerships that’ll benefit you both. It’s an important factor for growing your business, and we’re here to walk you through how it works.
In this article, we’ll cover what supplier development is, why it’s important to invest in and 3 steps for helping your suppliers improve their operations.
What is supplier development?
Supplier development is the process of working collaboratively with your company’s suppliers to help them improve their performance.
Essentially, the purpose of supplier development is to help your suppliers consistently deliver quality products, meet deadlines and perhaps even reduce costs over time.
Key aspects of supplier development include:
- Assessment and evaluation: Are your suppliers delivering on time, providing good quality and offering fair prices? A central aspect of supplier development is keeping tabs on how your suppliers are performing. This helps you spot areas that might need improvement.
- Collaboration and communication: In supplier development, it’s important to make sure you and your suppliers are on the same page about goals, expectations and how things should be done. It’s all about teamwork.
- Training and education: Offering training or workshops is a great way to help your suppliers get better at what they do. Whether it’s improving their quality control or adopting new tools, helping them learn benefits everyone.
- Process improvement support: A key element of supplier development is working with your suppliers to help find and fix any inefficiencies in their processes. This can help their operations run more smoothly, which is great for everyone involved.
- Performance monitoring and feedback: Keeping an eye on how your suppliers are doing and giving them regular feedback helps ensure they continually improve – and that benefits you both.
If your company relies on third-party suppliers for products, materials or services, you want them to offer you the best possible value for your investment. Sometimes, however, issues arise. Perhaps you’ve noticed that one of your suppliers is consistently late with deliveries, or maybe their quality standards are dropping.
If you have a good relationship with that supplier, you might not want to replace them yet. Instead, you could choose to work with them to fix the issues you’re experiencing and improve their performance for the benefit of everyone involved.
The benefits: Why you should invest in supplier development
There are plenty of advantages to working with your suppliers to improve their operations.
Basically, the better your suppliers, the better off your business is – but that much is probably obvious.
Let’s take a closer look at some of the many benefits you stand to gain from helping your suppliers improve:
- Better quality: One of the main benefits of supplier development is watching the quality of your suppliers’ products and services improve. You’ll experience fewer defects and issues, and that benefits both you and your suppliers.
- Faster delivery: With smoother processes and better capabilities, your suppliers will be able to meet deadlines more reliably – and that reduces lead times.
- Lower costs: As your suppliers become more more efficient, they might reduce their costs, which means lower prices for your business.
- Stronger relationships: Supplier development means collaborating closely with your suppliers. That helps build trust and foster lasting relationships – an important asset for your business in the long run.
- Better sustainability and compliance: Helping your suppliers improve can lead to better compliance with environmental and social standards. In other words, you can build a more sustainable supply chain together.
- Mutual growth: As your suppliers grow and improve, so does your business – and this can lead to many new opportunities. In short, your mutual growth benefits you both.
And much, much more. In other words, supplier development is well worth your investment.
The supplier development process: 3 steps for helping your suppliers improve
As you can see, there are plenty of reasons to invest your resources in supplier development – so let’s get into how you do it.
Here are three steps you can follow to help your suppliers improve their performance:
1. Capability assessment
The first thing you need to do is figure out where your suppliers stand right now. This is known as a capability assessment – think of this as a health check-up, but for their business.
You’ll want to look into areas like their product and service quality, how reliable they are with deliveries and whether their costs match your expectations. This might involve visiting their facilities, talking to their team and reviewing their performance data.
With this kind of check-up, you’re aiming to get a clear picture of your suppliers’ strengths and weaknesses so you know what they’re good at and where they could use a bit of a boost.
2. Planning and execution
Once you’ve got a good understanding of your suppliers’ current capabilities, the next thing you want to do is come up with a game plan to help them improve.
Sit down with your suppliers and map out what needs to change. Maybe their staff needs more training, their equipment needs an upgrade or they need new, improved processes to speed up their operations. Whatever it is, you’ll work together to figure out the best approach.
When you’ve come up with a plan, it’s time to put it into action. This could involve:
- Sending in your own experts to help out
- Setting up workshops for supplier staff
- Investing in new tools and equipment
There are plenty of ways to go about it. The key is teamwork – you’re working together to make these improvements happen.
3. Regular follow-ups
Implementing improvements is one thing – making them last is another. You can’t let go of the reins just yet. You need to keep an eye on how things are progressing, and that means regular check-ins to see if the changes are making a difference.
Is the product quality improving? Are deliveries getting faster? Are costs decreasing? These are important metrics to keep tabs on to make sure your improvement activities are actually playing off. If you notice something isn’t working as planned, you can adjust your approach.
With regular follow-ups, you can help keep everyone on track and ensure that the benefits of your development efforts have come to stay.
Conclusion
Supplier development can help your suppliers consistently deliver quality products, meet deadlines and reduce costs over time. These improvements don’t just benefit them. After all, it’s a partnership – when your suppliers do well, so does your business.
With the three steps above, you’re all set to start helping your suppliers improve their operations, strengthening your professional relationships and boosting operations for both you and your suppliers along the way.
