PPICW's 10 Reasons Why
As defined by the Chartered Institute of Procurement & Supply: “Supplier development is closely related to supplier relationship management and is the process of working with certain suppliers on a one-to-one basis to improve their performance for the benefit of the buying organization.”
There are many different approaches to successful supplier development, including a structured program or informal company initiatives or processes. Supplier development is a business strategy that involves working with your diverse suppliers to boost their performance and drive continued business growth. Through education and mentoring, you’ll help drive more sustainable and robust economic opportunities for your organization. Below, we’ve outlined 10 reasons to invest in a formal supplier development program.
Gain a Competitive Edge - By educating the diverse suppliers in your network on sourcing and procurement best practices, you’ll help them access more vendors and foster competition between their suppliers. In addition to driving their growth, this optimization will empower them to offer more competitive pricing, service levels and options to your business.
Promote Innovation - Development programs present opportunities for suppliers to work together for the benefit of Your Organization. That may mean competing for a contract or partnering together with other diverse suppliers to accomplish a project. Creating these partnership opportunities encourages out-of-the-box thinking and empowers your suppliers to offer more specialized solutions.
Access More Supplier Channels and Sources - By investing in the success of your diverse suppliers and giving them opportunities to collaborate, you’ll help grow your channels and sources. More supplier channels ultimately mean more companies competing for your business and more options to choose from. With more options available, you can be more selective in your procurement decisions, receiving the best possible product and value.
Encourage Collaboration Between Suppliers - Small diverse suppliers often lack the resources or expertise to compete for large contracts on their own. A development program can help encourage suppliers with complimentary solutions to team up on business opportunities that they would otherwise be unable to handle. These mutually beneficial partnerships allow each supplier to focus on its specific area of expertise, thereby ensuring that your organization receives a top-quality solution.
Improve Brand Perception - Just like supplier diversity programs, supplier development initiatives encourage the economic development of surrounding communities. This local community impact can help humanize Your Organization and enforce brand values. To amplify the impact that your supplier development program has on local and national brand perception, you can showcase your initiatives in your marketing efforts.
Economic Development - By investing in the development of your diverse suppliers, you’ll also drive job creation and economic growth opportunities for local businesses and families. Along with boosting brand perception, more jobs will also lead to more sourcing options for your organization down the line.
Create Stronger and More Sustainable Business Partnerships - Partnering with a diverse supplier for a single project or contract may not be enough to help it become established in its industry. By nurturing longer-term relationships with small suppliers, you help them gain the economic and business resources they need to continue to grow. At the end of the day, their growth will nurture a more reliable, sustainable, and beneficial partnership for both businesses.
Improve Customer Satisfaction - Nurturing a more personal relationship with your suppliers can also benefit Your Organization customers. Businesses that cultivate strong supplier relationships are able to communicate with greater ease, troubleshoot issues with greater efficiency, and ultimately provide a better-quality end product to their customers. Greater alignment and transparency in your supply chain can also positively impact brand perception.
Achieve Corporate Supplier Diversity Goals – Your Organization will establish quarterly and annual goals for supplier diversity initiatives. A supplier development program will help ensure that Your Organization continues to grow in the right direction and see a sustainable return on your efforts.
Improve Alignment and Engagement on Supplier Diversity Initiatives - Even more than supplier diversity programs, supplier development requires the support and involvement of the entire organization (beyond just your procurement department). Working one-on-one with suppliers encourages C-suite executives to become more intimately involved with these programs and aware of their benefits. This direct engagement will help improve buy-in for both supplier diversity and supplier development initiatives.
A Five-Prong Approach to Your Organization Supplier Diversity Success
Phase I. Establish an Accurate Baseline
Phase II. Update Program Benchmarks and Goals
Phase III. Evaluate Tier-2 Program
Phase IV. Develop and Launch Supplier Development Program
Phase V. Integrate Supplier Diversity Throughout the Organization and focus on Continuous Process Improvement
For more information on PPICW's approach to a impactful supplier diversity program, click the link below to contact us today!