Supplier development

Supplier development programs matured the fastest in discrete industries. The Nokia/Ericsson story was a catalyst for high-tech and discrete manufacture adoption. A supplier development program is an orchestrated initiative using the supply chain strategy to define supplier relationships. It includes one or more of these key elements  

In the initial phase of snpply chain maturity, supplier development programs focus on the lowest pnrchase cost. In these early phases, the procurement team operates as an isolated silo and buys with a singular cost focus. 

I started in a company where everything was decentralized. We were like cowboys roaming the earth. I think we realized that we were a jack-of-all-trades and masters of none. 

Over time, the supplier development program transitions to focus on total cost and the building of value. This includes the design of programs to work with suppliers to accelerate open innovation, reach CSR goals, and build strategic relationships to nse assets and key relationships to penetrate new markets. It takes different forms in different supply chains. 

In 1998, the company had two days of working capital and in 2010 it operated with a negative 31 days of working capital. It successfully built supplier and information systems to fund the supply chain. To do this, the company pared down its supplier companies from 204 to 47 and moved to a just-in-time (JIT) inventory program with suppliers warehousing their components only 15 minutes from the Dell factory. This JIT inventory system decreased inventory costs and led to a 6 percent profit advantage in components. 

However, not all suppliers are sufficiently prepared or capable of supporting the buyers in accomplishing their objectives. As a consequence, buyers often focus on developing those suppliers that are either too critical for the buyer or have sufficient 

Key issue How can upstream supply processes be integrated to improve material flow  

One of the keys to increased responsiveness in the supply chain is a high level of integration with upstream suppliers. Analysis of the supply chain often shows that product lead time is usually measured in weeks rather than days. This is caused by excessive inventories of raw materials, packaging materials and intermediate products being held upstream of the final point of manufacture. Not only does this represent a cost burden, it also increases the P-time of the supply chain as a whole. 

Various trends are observable as leading-edge companies seek to improve their management of the upstream supply chain, including  

---

The link with FMEA brings into play the additional dimension of potential variability into the assessment of the failure modes and the effects on the customer. The Conformability Matrix also highlights those bought-in components and/or assemblies that have been analysed and found to have conformance problems and require further communication with the supplier. This will ultimately improve the supplier development process by highlighting problems up front. 

The proeess eapability requirements for eomponent eharaeteristies determined by CA are used to support the supplier development proeess. In the approaeh, new designs of bought-in parts sueh as eastings, plastie mouldings and assembly work are diseussed with proeess eapability requirements as the first priority. Where a potential problem with the toleranee on a eharaeteristie has been identified, this... 

In summary, an effeetive supplier development proeess should eontain the following elements (Gryna, 1988) ... 

Lloyd, A. 1994 A Study of Nissan Motor Manufacturing (UK) - Supplier Development Team Activities. Proc. Instn Mech. Engrs, 208, 63-68. 

MWG-Biotech - An Instrumentation Supplier Develops into a Genomics Company... 

Any additional information that may help the computer system supplier/developer to provide a quotation can be provided as appendices... 

The FAT, Figure E-2, is a mutually agreed acceptance test of the system between the supplier/developer and the user. It is performed by the computer technology supplier/developer at the supplier s/developer s site. The user will often witness this test to accept the system for delivery and to mark a contractual milestone. 

At the moment, there are a growing number of biodegradable polymers performing well in niche applications. Many of these materials can be even more cost competitive in the future compared to petroleum-based resins including PET, polyethylene (PE), and polypropylene (PP) as suppliers develop better material properties that can lead to thinner films or lower processing costs. 

Pharmaceutical and healthcare companies shonld consider working with key individnal snppliers and industry groups to help suppliers develop electronic record/signatnre-compliant COTS products. Current versions of COTS prodncts need not be specifically cnstomized for nsers to provide full electronic record/signatnre fnnctionality the development risk with bespoke development must balance with the complexity and criticality of the change. It shonld be possible to compensate for the lack of key software fnnctionality by adding nser procednral controls. 

Suppliers developing software should follow project software conventions and standards. System software is typically supplied by the original SCADA product supplier. Generally, system software is independent of the application and may include the following ... 

All suppliers, system integrators, and consultants contributing to the supply of systems and advice that may impact GxP regulations must be audited. Often the supplier development organization is... 

The US military and UK MoD set lubricant specifications as users of mechanical equipment systems, rather than the manufacturers and independent of lubricant producers. US military committees, military personnel and representatives of equipment suppliers, developed specification and approval systems for lubricants used by US and worldwide lubricant manufacturers, other than Eastern Bloc countries. 

Supplier on-site support plan Power requirements Voltage requirements Open circuit voltage Supplier capability assessment Suppliers development timing plan... 

Several projects for developing commercial process-engineering databases have been launched in the years 1980-1990, but none has survived. Rapid changes in technology made the development of such products very risky. Instead, each major supplier developed a proprietary database. However, the absence of standards affects both software producers and users. A collaborative approach based on open software architecture becomes necessary. An example is the CAPE-OPEN initiative that will be described later in this chapter. 

From this information the supplier develops the optimum design for bid purposes. In large chemical companies the complete mechanical design is worked out by their own de.sign group. Further information sent to the fabricator for construction bidding then includes ... 

The final measure being used is price. This needs to be agreed upon but it should not be expected to be reduced every year without help to improve the suppler s producing process. Supplier development is an important issue in removing costs from the supply chain. It mnst be accomplished in a manner that will make both the customer and the supplier better. Sometimes I see this being done by customers telling the snppliers they want a 10... 

Visit with raw materials and service suppliers, development partners and distributors... 

Also molded are unreinforced or RP to metal hybrids. Plastic-metal hybrids are replacing all-steel structures in automotive front end modules at an accelerated rate. Technical approaches to hybrids are multiplying as more resin suppliers develop alternatives to the overmolding method first established by Bayer. Tier One automotive part suppliers, while tight-lipped on their plans, are also working on proprietary hybrid concepts. 

Learning from failures. Unlike P G, both companies have stumbled in the last five years. Apple s supplier development issue bubbled up as a corporate social responsibility press issue with Foxconn in 2012. Likewise, Dell s challenge with channel redefinition that started in 2009 is ongoing. 

In the evolution, the vertical silos of supply become connected through horizontal processes. The most common horizontal processes are revenue management, sales and operations planning (S OP), supplier development, and corporate social responsibility (CSR). (This transition is covered in great detail in Chapter 5.) These horizontal processes become connectors for the end-to-end value network. They align the traditional supply processes of source, make, and deliver against a business strategy. When companies successfully build market-driven value networks, demand and supply volatility can be traded off bidirectionally... 

This process innovation was a wake-up call for the Samsung management team. The leadership team at Samsung became innovators in inventory management and supply chain processes championing horizontal process evolution of S OP, revenue management, and supplier development to never have to write off inventory. 

The face of the mobile phone industry had changed forever, all because of a fire that had been contained in 10 minutes. The gravity of the situation spawned a focus on supplier development within the industry. 

As the great stumbled, the path forward was horizontal processes. The most common are revenue management, sales and operations planning, supplier development, and corporate social responsibility. These horizontal processes bridge the links of the supply chain to give it structure, purpose, and connectivity. 

---