Kormac Insights
Supplier Development
Supplier Development Program (SDP)
From life sciences to manufacturing, many of our client partners are turning to their supply base for collaborative performance improvements. Formalizing a Supplier Development Program (SDP) can transform transactional relationships into strategic partnerships delivering outsized mutual benefit. Academic studies of over 280+ SDPs found on average:
• 12-15% quality improvement
• 15-20% on-time delivery improvement
• 8-10% cost efficiency improvement
In our experience, the cost reduction potential is even greater when SDPs include collaborative Lean activities, yielding process improvement, variability reduction, and waste reduction opportunities.
Our critical success factors for productive SDPs are:
• Treating suppliers as partners
• Defining clear goals and expectations
• Fostering trust and transparency
• Communicating and sharing knowledge
• Aligning incentives for mutual benefit
• Collaborating and training to achieve performance improvements
• Dedicating resources to follow-through and sustainability
• Committing to SDP as a long-term, strategic initiative
Surprisingly, only 30% of organizations have formal SDPs in place. Therefore, in addition to cost and operational performance enhancements, SDPs offer the promise of meaningful competitive advantage.
Sources:
National Association of Manufacturers, Journal of Production Economics, Technovation Journal, Journal of Operations Management