I hope that you have enjoyed the article, “Supplier Collaboration, Development, More.”

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In the article, I defined four terms:  supplier collaboration, supplier development, supplier management, and supplier rationalization.  I would like to expand on the distinction between the first three terms here.

You see, with supplier management (inclusive of, and somewhat synonymous with, supplier evaluation), you are sharing with your suppliers how you are measuring their performance.  You’ll tell them things like what percentage of their orders they are delivering on-time, what percentage of their items are being rejected for quality failures, what types of service complaints you have documented, and the like.  Naturally, you are giving them orders to improve.

But one activity that is not implied in supplier management is instructing suppliers exactly how to improve.  That’s where supplier collaboration and supplier development come in.

With supplier collaboration, both your organization and the supplier are acting as equals.  You are essentially acknowledging that you both have relatively equivalent expertise in the areas in which improvement is needed.

With supplier development, both parties are acknowledging that your organization is the one that possesses the higher level of expertise.  As such, your organization is taking the lead to teach your supplier exactly what needs to be done to improve performance, increase capabilities, etc.

I hope that these definitions help to clear up some long-held confusion around ways to work with suppliers.  We’ll be getting deeper into the topic of working with suppliers in future editions of PurchTips.