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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
such circumstances the buying organisation may select a suitably attractive
supplier and then develop its ability to meet the current and future needs of the
buying organisation. Essentially, training in areas such as project management,
teamwork, quality control, production processes and supply management may be
offered to the supplier, and will ultimately prove to be a worthwhile investment [8].
Every organisation should have sufficiently sound reasons for adopting supplier
development initiatives. Reasons vary from pull factors (positive ones) to push
factors (negative ones). There are a number of push factors that can give any
organisation the motivation to adopt supplier development programmes [17].
Current suppliers may not be able to provide a demanded product and, in
this instance, one option may be to identify a suitable supplier and develop
it to the extent where it is able to supply the demanded product. As a result,
the organisation’s supply needs will be satisfied. It may also be the case that
a supplier is either not performing to expectation or requirement and, when a
supplier underperforms, a possible solution is to develop that supplier, instead
of dropping it.
In fact, it is not that easy to get out of a contractual obligation with a supplier and
to avoid the possible messy and costly legal disputes with an underperforming
supplier; an alternative would be a supplier development programme aimed at
enhancing the supplier’s performance.
There are several prerequisite factors for supplier development programmes
to be implemented effectively. Perhaps the most important is that the supply
management practitioners in the organisation must be able to analyse, evaluate
and appreciate the business objectives and needs. This is because supplier
development programmes must serve the objectives of the business and must
satisfy the identified needs of the business.
Another prerequisite for effective supplier development is the existence of
adequate and appropriate skills. Besides advanced procurement expertise,
there is a need for skills in such areas as contract management, project
management and communication. Interpersonal skills are also useful in nurturing
the necessary rapport with suppliers. Furthermore, team skills are essential to
enable personnel in both organisations to work together constructively.
5.6.1 THE SUPPLIER DEVELOPMENT PROCESS
A variety of approaches are available for use in supplier development initiatives.
There is no single universally accepted approach to supplier development. It is
up to supply management professionals in the organisation to choose the most
fitting approach that matches their relationship with the supplier that they intend
to develop. Each approach has its suitable areas of application, depending on
context. A typical supplier development process is illustrated in Figure 5.4.