How Supplier Development differs from Supply Chain Optimization

By John Remsey, Senior Manufacturing Consultant with IMEC, the Illinois Manufacturing Excellence Center.  John has over 20 years of business and manufacturing experience with an emphasis on Supply Chain Optimization, Lean Enterprise and Manufacturing Information Systems

The effectiveness of a supply chain is no different than any other manufacturing process – some function quite well, while others, eh, not so well.  When a perceived ineffective or, worse yet, a detrimental supplier is identified, our first reaction is to spring into action and go “fix” that supplier.  We hop in our car or on a plane to go solve the problem, make a few changes and return to home base with a “success” under our belts.

When our products or processes need a new material, need to re-source an existing material or find a supplier for a supporting service, we cast out a net, pick the best of the options and start sending Purchase Orders.  These activities and their supporting actions are most commonly referred to as Supplier Development.

Brandon Phoenix, a Business Consultant with TMAC based in the Dallas, TX Metroplex area states “Supplier Development, typically, looks at poorly performing suppliers and resolves those performance issues in isolation.”  This results in improved performance for the single supplier but may “sub-optimize” the entire supply chain by not focusing improvement efforts on the true constraint.

Supply Chain Optimization, in contrast, first identifies all suppliers along the supply chain’s Critical Path (longest lead time).  A network diagram is then created showing all bottlenecks and the constraint along the supply chain.  Once identified, the constraint is isolated and remediation identifies a method and raises the performance of the constraint, thereby reducing the Critical Path time.

“Supply Chain Optimization improves all suppliers along the Critical Path, bringing the level of performance required to meet the end Customer’s level of demand,” says Anthony Cerilli, Engagement Manager with GENEDGE Alliance in Richmond, VA.

John is a member of IMEC, the NIST-MEP center in Illinois.  NIST-MEP has developed a constraints-based approach to Supply Chain Optimization.  Visit the NIST-MEP Supply Chain Optimization website at www.mepsupplychain.org. Email John at jremsey@mepsupplychain.org.

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