What is Supplier Development? A Technical Definition

What is Supplier Development?

The Term Supplier Development has been used since many decades, however, the scope of the definition was not presented. During my research in Lancaster University Management School, myself and my supervisor believe that there is appetite for update definition, which is presented in this blog post.Supplier Development

According to Krause et al. (2007) the term was first used by Leenders (1966) to describe efforts by manufacturers to increase the number of viable suppliers and improve their performance, but no formal definition was presented which covers both the manufacturers and the service providers. One of the first formal definitions of SD was presented by Watts and Hahn (1993, p. 12) as:

“A long-term cooperative effort between a buying firm and its suppliers to upgrade the suppliers’ technical, quality, delivery, and cost capabilities and to foster ongoing improvement”.

It is important to note that the above definition does not take into account short-term efforts to improve cost, quality or delivery issues with supplier(s) to meet customer expectations. However, a frequently cited definition in the literature review is presented by Krause and Ellram (1997b, p. 12) as:

“any effort of a buying firm with its supplier(s) to increase the performance and/or capabilities of the supplier and meet the buying firm’s short – and/or long-term supply needs”.

In this definition the phrase “the buying firm’s short – and/or long-term supply needs” refers to those needs that are dictated by the firm’s operational and competitive strategies. This definition does not restrict the scope of the varied activities that may be part of a Supplier Development programme; however, it is intended to exclude developing a new source of supply. Krause and Ellram (1997b) also suggest that SD can be a one-to-one effort or with two or more suppliers, or it can be a more global effort that could be rolled out to a large supplier base globally.

Latest Technical Definition of Supplier Development?

Whilst the definition by Krause and Ellram (1997b) mention short-term efforts to increase supplier performance, it does not include the aspect of continuous improvement. Therefore, it is argued that an updated definition of Supplier Development is needed, as proposed here by myself:

“Any effort of a buying firm working with its supplier(s) to increase the performance and/or capabilities of the supplier and meet the buying firm’s short- and/or long-term supply needs. Moreover, Supplier Development promotes ongoing improvements that are intended to benefit both buyer and supplier(s)”.

In the above definition the term “supplier” includes subcontractors. Nevertheless, it is useful to distinguish between the two. While the former is a provider of products or services available in the market to an extensive clientele in large quantities, the latter is a provider of tailored products or services to one customer, in varying quantities that are not normally available in the market. In this thesis, the term “supplier” will be used in its broadest sense to include “subcontractors” as defined above.

10 thoughts on “What is Supplier Development? A Technical Definition

      1. Mmm on the claim for a new “technical” definition, as the same was published by us back in 2009 see”Excellence in Supplier Management” by Emmett and Crocker 2009

        QUOTE
        Meanwhile for the purposes on this book, Supplier development will be defined as:

        “Any effort of a buying organisation towards a supplier that will increase the supplier’s performance and/or capabilities, to meet short and/or long-term needs of the buyer.”
        UNQUOTE
        Coincidence or plagiarism?

  1. While the abstract and arms’ length definition might be of passing interest outside of operational responsibilities, it sesms that a more useful – real-world, and practical – approach might be to begin at the beginning.

    The supplier is but a juncture reached after the mission-critical decisions have been made regarding services, materiels, substitutes, and sourcing possibilities. These initial considerations must, in any reasonable view of the strategic issues involved, lend themselves to categorizations – and there is a variety of valid and useful approaches and models to do so.

    Once categorized, sources and desirability need to be identified, recognizing that the ultimate suppliers will needs be part of relationships with markedly differing characteristics.

    Only then is it sensible to begin intinacies and processes intended and designed to engage in long term sustainable continuous improvement. No question, these are important, but the specifics vary widely, are often customized based on criteria and circumstances – and they need to be addressed in a rational sequence.

    Beginning with a notion of a universal supplier programme, soread like so much peanut butter over the supply universe is putting the cart before the horse in extremis.

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