A Supplier development program is actually a procedure by an organization to improve its supplier's capabilities. This program may be interpreted as a company's attempt to replicate or to transfer some of its in-house organizational capability across the company boundaries.
Theoretically automakers in automotive industry may send their own engineers to the shop floor of supplier to solve a problem with a specific component to meet the product reveals date. Or it may be possible that they may provide training courses for employees of supplier in techniques like Value Engineering, Quality Circles and Simultaneous Engineering. They may also ask a supplier with a view to learn and to work on specific production line for extended period to achieve quality improvement, cost reduction etc.
Supplier Assessment is a strategy. It means that a buying firm makes an id-depth evaluation of quality of supplier in cost, delivery, technical and managerial capability. Providing the suppliers with feedback is the most important part of the assessment process so that they know about the buyer expects and also to provide the supplier with directions for improvement.
Within this area, Supplier Incentives are another developing strategy. In this strategy, the focus is to give the supplier extended business if they can attain a certain goal. All these market based incentives are based on a performance of supplier and are designed to make the supplier perform even more good.
The third strategy is Competitive Pressure and applied by buying company to its suppliers when it's using more than one supplier. The goal is to buy from the supplier which is most competitive on the market and their focus is on low prices.
When buying firm directly, direct Involvement activities involves itself in the supplier development effort and important investment by the buying firm through activities like education and training of a personnel supplier.
So, I hope now you understand the strategy of this program.
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