Managing Quality

Chapter 12. Supplier Development

B. G. Dale and B. Burnes

Introduction

The quality of purchased supplies is crucial to an organization's products and services and consequently to its success in the marketplace. In many cases, as outsourcing has become the norm, bought-in components and services can account for some 70 to 80 per cent of the final cost of a product. It is therefore clear that suppliers are critical to the competitiveness and performance of the purchaser's products and services. Many major European companies, following the example of Japan, have during the last 15 years or so started to encourage their suppliers to develop their quality management systems, adopt a continuous improvement philosophy, eliminate non-value-added activity, improve their manufacturing systems, use lean manufacturing techniques, become more flexible and responsive, pursue cost-down activities, and concentrate on their core competencies and product lines. If the major companies wish to become and stay competitive they have to take their suppliers with them; electronic commerce and the internet are also facilitating and encouraging closer links with suppliers.

This process of customers working together with their suppliers to effect these changes is given a variety of names: supplier development, supply-chain management, supplier relationships management, co-makership, partnership sourcing, customer–supplier alliances, and proactive purchasing. This variety of names, and the way different organizations ...