Supplier Development
Definition
A deliberate program of working with a supplier to improve their capabilities, quality, cost, or delivery performance so they better meet the buyer's needs.
In Practice
Supplier development ranges from light-touch, sharing forecasts, giving structured scorecard feedback, training supplier staff on your requirements, to intensive: sending engineers to run kaizen events in the supplier's plant, co-investing in tooling or equipment, and jointly redesigning processes. Buyers invest because switching is often costlier than fixing: for strategic or sole-source suppliers, improving the incumbent beats requalifying an alternative.
Successful programs pick suppliers who are willing but underperforming, set measurable targets, and share the resulting gains, cost savings split between the parties keeps the supplier motivated. Development is also the practical engine behind supplier diversity goals, growing small suppliers into contract-ready sources.
Example: a supplier's 12 percent defect rate on molded parts threatens an assembly line. Rather than resourcing, the buyer sends two engineers for a six-week project on process controls and preventive maintenance. Defects fall below 1 percent, and the negotiated savings are split, cutting the part price 5 percent.
Related Terms
The systematic practice of segmenting suppliers, managing performance, and collaborating with strategic ones to extract more value than transactional buying alone can deliver.
Supplier ScorecardA periodic report that grades a supplier's performance against agreed metrics such as on-time delivery, quality, cost, and responsiveness.
Supplier QualificationThe formal process of verifying that a prospective supplier can reliably meet quality, capacity, financial, and compliance requirements before awarding them business.
Supplier DiversityA procurement practice of intentionally including businesses owned by underrepresented groups, such as minority-, women-, or veteran-owned firms, in sourcing opportunities.