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6 Cards in this Set
- Front
- Back
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Why should a company use supplier development?
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- Cost reduction
- Early involvement of suppliers in product development gives several positive effects • Co-operation strengthen the ties between companies and creates stability. • Mutual commitments creates trust. • It is very expensive to develop new business relations. Profitability is best achieved in a longer relationship, a win-win situation |
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How can supplier development contribute to cost reduction?
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– Administrative costs • Monthly billing
• Reduced control costs e.g. abolished arrival controls • - - EDI, Electronic Data Interchange – Logistics costs • JIT deliveries reduces inventory and waste • Daily deliveries (or weekly, or...) |
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What positive effects can early involvement of suppliers give?
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– strengthening of resources
– production friendly components – increased quality – shorter time to market – reduced development costs - about 80% if the total cost is decided already in the construction phase. |
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Name some of the important aspects of supplier development
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• Top management commitment
• Competence development • Communication and involvement from different functions • A good climate in the relationship (e.g. The nine axioms), trust. • Measurement |
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What are the nine things that have to be thought of for superior customer-supplier alliances? FACCCILDS
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1. there is a shared specific focus on satisfying their common end customer
2. there is an alignment of vision 3. there is a fundamental level of cooperation and performance to commitment (trust) 4. there is open and effective communication 5. decisions are made by maximizing the use of competencies and knowledge on both sides of the relationship 6. all stakeholders are committed to generate long-term mutual benefits 7. there is a common view on how success is measured 8. both sides are committed to continuous improvement and breakthrough advancements 9. whatever competitive pressures exists in the environment are allowed to exist within the relationship. |
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Name some barriers to supplier development?
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• Poor communication and feedback
• Complacency • Misguided improvements objectives • Credibility of customers • Misconceptions regarding purchasing power • Lack of clarity and commitment • Lack of unified approach • Misaligned sourcing and and performance metrics • Concealment of problems • Initiative fatigue • Resource limitations • “Blame the supplier culture” • Lack of trust • Confidentially issues • Legal issues • Imbalance of power in the relationship |
