Developing and sustaining a supplier development program requires a shift in thinking about your suppliers, a long-term vision to strengthen and streamline your supply chain.
Your first step is to establish a supplier development policy. This policy is your program bible—outlining your goals, detailing how you will track progress, and identifying resources already available or to be developed. ON Semiconductor has a terrific pamphlet outlining its policy and expectations.
Once you have a solid plan for your supplier development program, it's time to acquire buy-in from the C-suite and other stakeholders. You need to show them how investing in supplier development benefits the enterprise as a whole. (I love this example of two companies offered supplier development assistance, the challenges faced, and the results.)
Use your goals to gain buy-in; your desired outcomes justify the program and should drive how you present the program to stakeholders. For example, if you want to cut costs without sacrificing quality, then helping a proven supplier streamline its processes is worth the resources you invest.
Part of your supplier development policy should focus on communication. Like any healthy relationship, communication is the key to making sure everyone is working toward the same goals, resolving potential conflicts, and celebrating successes.
You need both internal and external communication strategies, tailored to those different stakeholders. How will you communicate supplier development policies, goals, and initiatives corporate-wide? How often will you provide reports? How often will you update your stakeholders about milestones and goals reached?
Don't forget the reason for your development program: the suppliers! How will you communicate with suppliers about opportunities and resources as well as expectations? How and when will you follow up with suppliers and track metrics?
If you have a supplier portal, review the communication tools available. A full-service supplier management system like ASCEND powered by CVM Solutions offers an array of tools for streamlining communication with suppliers and internal stakeholders alike.
Keep in mind that while mass communication is appropriate in some situations, personalized interaction is far more effective when working with individual suppliers to institute significant change.
As Jonathan Webb writes at Forbes, “Tailored communication, directly from supplier managers to account managers, can more likely galvanize change. The clearer the expectations (with dated milestones and measurable deliverables), the easier it will be for suppliers to follow.”
If you're feeling overwhelmed about what resources to offer suppliers, fear not. Chances are good that you already have what you need, waiting to be repurposed for your supplier development program.
Take a look at the training and workshops available internally. Does your company offer Six Sigma or other leadership training? Offer a session for suppliers!
Do you have orientation materials for employees focusing on topics such as corporate policies, corporate vision, and safety regulations? These are relevant to your suppliers!
Do you host a trade event or leadership summit? Invite the suppliers who would most benefit from an inside look at your industry and best practices!
Now think about other types of resources you have, especially people resources. Mentoring can be a powerful engine to drive success. In a 2014 study of its user base, MicroMentor found that mentored businesses increased their company revenue by 83 percent! That’s a remarkable increase on its own. But compare that to the 16 percent revenue growth reported by non-mentored businesses, and the benefits of mentoring are clear.
Your company likely has several people with a wealth of expertise who would be willing to share it with business owners ready to level up. Even better? The cost is mostly time invested, which your company will likely benefit from in the long run.
Local chambers of commerce, industry and trade groups, and educational centers usually have initiatives already available or being developed that could benefit your suppliers. Look for capacity-building programs, entrepreneurship initiatives, pitch contests with capital investment prizes—the innovative programs on offer through local and national business groups are amazing. Consider partnering with these groups to support and enhance their resources.
Regular audits and reporting not only keep your supplier development program on track, but they also help identify potential opportunities and strengthen stakeholder buy-in.
An overlooked but valuable strategy is to involve suppliers and other stakeholders through surveys. Not only do you gain valuable insight about how they view and interact with the program, but asking for their feedback also increases a sense of ownership and investment in the program's success. Win-win!
The program goals you established earlier will guide you in determining which metrics to track. But keep in mind that your goals may change, and metrics you may not need now could be relevant later.
For example, if you don't yet have a supplier diversity program but plan to start one, it would be helpful to track diverse spend in anticipation of when you do establish a supplier diversity program. Imagine being able to include that data in your proposal when seeking buy-in for supplier diversity!
Supplier development doesn't have to be costly or overwhelming. Start with a well-crafted policy; realistic, measurable, specific goals; and the resources you already have. Build in consistent, clear communication and partner with other organizations to give your suppliers the extra boost they need to succeed in winning and executing contracts on time, on budget, and to your expectations.