Supplier Development and Management: The Fruit of a Poisonous Tree?

Note from Author: In this the second of the 7 part series Dangerous Supply Chain Myths, I discuss the fatal flaws with an adversarial approach toward supplier development and relationships.

Supplier Development and Management
Effective supplier development and management should deliver a competitive advantage in cost, quality, delivery/responsiveness, technology, and innovation achieved.

In Segment 1 of this 7 part series, I reviewed the inherent risks associated with the broad application of a consolidation strategy. This was an appropriate starting point due to the fact that any adjunct undertakings that extend or branch out from this original "tree" will by and large fail.

Let me start off by saying that the ISM, CAPS and Kearney report was correct in terms of highlighting Supplier Development and Management as one of the seven key tenets of succeeding in a dynamic world. However this determination is undermined by the consolidation strategy that is pursued by the vast majority of organizations.

Specifically, do suppliers perceive your current e-procurement strategy as a threat or a benefit to their organization? What is worth noting is that this question even extends beyond the concerns of the SME community to include supplier organizations of all sizes. In 2005 I addressed an audience of 200 senior executives from the supply-side of the automotive industry. The general consensus regarding e-procurement (re technology) overall can be summed by just two of the innumerable concerns that were voiced afterwards. They are as follows:

"It (e-procurement technology) will have a negative effect on my business."

"The product (we sell) is commoditized under an e-procurement program . . . we will do everything to resist participating."

These are strong sentiments that were still being echoed by suppliers in a March 2007 seminar I gave in Toronto. This should prompt you to ask the question; is my organization's current strategy seen by our supply base as a benefit or a threat? Of an even greater significance is the question, will a broad consolidation strategy enhance or erode my supply base? Now there are certainly organizations which have both the volume and means to "flex" their buyer-side muscles, and are therefore prone to be less than empathetic with supplier concerns. However if history has taught us anything, it is quite simply this supplier buy-in is

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