WG Supplier Development

(This is not a new article and is written from an ISO perspective, but the article is nevertheless very relevant to the changes that are about to take place in the South African landscape. Below are some areas that I thought was specifically relevant.)

Instead of focusing on a “price down” strategy, organizations need to employ a “cost out” strategy. This requires a holistic view of the supply chain whereby an organization works with its supply base to achieve the removal of waste through joint initiatives aimed at value creation. More collaboration is required by your organization up to the customer, down to your suppliers and across the supply chain (yes, you need to work with the competition when you share suppliers and together you can improve processes and supplier sharing arrangements to reduce cost and create value within the supply base without affecting competition). Improvements in communication, information sharing and relationships based on trust equate to the hallmark of a new era in competing as a supply chain

The traditional relationship between a buyer and its suppliers needs to be transformed into one that helps build closer ties and fosters continued collaboration between both parties to the relationship. The philosophy your organization applies has to lead to “win-win” results for buyer and suppliers. Any other approach, such as the traditional scenario where negotiations are one-sided, will result in a suboptimal situation and impact the overall effectiveness– the leanness–of the value chain.

A collaborative relationship means a readiness on both sides to discuss future plans, a willingness to understand each other’s business processes, a commitment to share in each other’s long-term strategies and an agreement to share in cost savings realized by any joint activities. What this comes down to is a culture change where top management and anyone else in your organization who interact with suppliers begin to treat them as partners rather than servants. It means communication and cooperation that is two-way from product design to delivery at the end-user.

Supplier Development

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