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The following is an edited extract from Supplier Relationship Management by Jonathan O'Brien.
Supplier intervention and development (SI&D) is a key component of Supplier Relationship Management (SRM) but can mean many different things. It could be a simple intervention, to having a supplier fix a problem related to the product or service they provide, to working collaboratively to develop capability across an entire process for mutual benefit.
Therefore, it’s important to adopt a flexible attitude to SI&D, as each approach needs to be matched to a specific supplier, what is being supplied and the prevailing environment and conditions. In other words, there’s no ‘one size fits all’ solution.
Having said that, interventions generally fall into one of two categories depending on the importance of the supplier and the required outcomes:
1. Supplier Improvement Interventions
These include corrective action, preventative action and continuous improvement, and focus on moving a supplier from a current position, perhaps based on previous performance, towards a new and improved position. This type of intervention, which is largely reactive, is most relevant to the middle tier of important suppliers and perhaps even some transactional suppliers.
2. Supplier Development Interventions
Relevant for strategic suppliers, supplier development interventions are typically proactive and focus on working with the supplier to move towards an agreed goal. This type of intervention is collaborative with the aim of developing new capabilities to enable the supplier to work towards a new goal that would otherwise not be feasible.
There are many varied reasons why a SI&D intervention may be necessary and appropriate, including the following:
Supplier Improvement
Supplier Development
Depending on the importance of the supplier, our goals and what the KPIs tell us, there are six possible degrees of action and intervention with suppliers that we can choose. Evenly split between reactive and proactive, these six choices can be summarized as follows:
Reactive
Proactive