supplier development program - undp, pakistan
TRANSCRIPT
SUPPLIER DEVELOPMENT PROGRAMME
POWERED BY: UNDP, PAKISTAN
Building Comprehensive Markets& Generating Equitable Growth
M Bilal Khattak SDP Consultant
CONTENTS
What is SDP?
Mission & Vision
Why SDP?
Estimated Time with Stages
Methodology
What SDP offers to Lead Company and Supplier Company?
Requirement for Participating Companies in SDP
Cost, support & subsidies for Lead Company & Supplier Companies
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
WHAT IS SDP?
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
What is Supplier Development?
Supplier Development is the process of working with certain suppliers on a one-to-one basis to improve their performance (and capabilities) for the benefit of the buying organization (Lead Company).
What is UNDP – SDP (Supplier Development Program) ?
UNDP Pakistan aims to Implement system through SDP:
That transforms the business relationship between a Leader Enterprise (Large and Medium) and its suppliers
Enhance the Pakistani economy by strengthening the competitive capacities of different sectors
Main Objectives of SDP To increase the social and economic profitability of participating enterprises
Promote the incorporation of latest technologies, teamwork, entrepreneurial and associative integration practices in the companies that promote their development and give them a long-term viability.
SDP MISSION & VISION
To Contribute to increased competitiveness and creation of decent work in small and medium enterprises in Pakistan
To strengthen value chains, based on the implementation of an efficient methodology
To build strategic relationships with supply companies demanding goods and/or services
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
“Become a lead and reference programme in development of
suppliers for Pakistan, that helps improve the performance of strategic sectors and generates opportunities
by articulating them with the market, through capacity building of small and
medium enterprises”
MISSION VISION
WHY SDP?
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
The Supplier Development Programme can:
Reduce the Cost: Cost reduction that helps to maintain the supplier’s profit margin
Resolve Serious Quality issue: Quality improvement that both reduces reject costs and/or increase reliability of buyer’s goods or manufacturing processes
Develop new routes to supply
Ensure quality control at supplier locations
Increase profitability of all the participants in the chain:
Boost Company Sales Develop a product or service not currently available in market place Generate competition for a high price product or service dominating market
Improve business alignment between the Lead Company and Supplier
Better Policies, Purchasing Practices, Strategy, and trained people to replicate the SDP to the rest of the production chain
STAGES WITH ESTIMATED TIME
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
Promotion & Formalization
Stage 1 Stage 2 Stage 3 Stage 4
Implementation & Follow Up
Stage
Stage 5
Documentation &
Systematization
Stage 6
Diagnosis Interaction
Design Implementation Plan
10 Months
Month 8-10Stage 1 Stage 3 Stage 5
Stage 2 Stage 4 Stage 6Month 0-1
Month 1-3
Month 3-4
Month 4-5
Month 5-8
SDM
WIN WIN
HOW DO WE DO IT?
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
• Establish Strategic Line of Action
• Agree on Activities
• Set Common Goals
Promotion & Formalization
• Identification of Buying Process
• Identify Improvement Opportunities
Diagnosis
• Validate Diagnosis
• Set Priorities
Interaction
•Establish Improvement Plan
•Establish Work plan & Responsibilities
Design of Improvement Plan
•Implementation of Improvement Plan, Action Plan and Action Lines
Implementation
•Documentation of Results
•Analysis for possible replicability
Documentation & Replicability
SDP Comprise of Six Stages
1 3 5
2 4 6
HOW DO WE DO IT? (CONTINUED…)
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
In order to create a win-win situation through SDP:
One or Two SDP Consultants intervene a Production/Value chain
Duration : ± 10 Months
Production/Value Chain 1 Lead Company, (LC)
Up-to 10 Supplier Companies, (SC’s)
One or Two SDP Consultants
Specialized Consultant (Where Required)
Supplier Development Methodology(SDM) is implemented
Later the Leader Enterprise continues to implement SDM with rest of supplier(s) in chain.
LC
SCSC
SC
SC
SCSC
SC
SC
SC
SC
Value Chain
One or Two SDP Consultants
Win Win
Specialized Consultants
WHAT SDP OFFERS TO LEAD COMPANY ANDSUPPLIER COMPANY?
Lead Company achieves
Develops more reliable suppliers on price, quality, delivery times, services…
Improves LC productivity by greater performance thanks to reduction of faults and delays
Better policies and purchasing practices
Flexibility in its supplies
Strategy, SDP Manual, and trained people to replicate the SDP to the rest of the production chain
Supplier Company achieves
Vision and clarity about its sales (it allows investments/ improvement projects)
Increases sales and/or profits
More competitive prices
Improves customer satisfaction: price, time, quality, service, Technical assistance
Culture of quality and continuous improvement
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
ASSC : Assessment System of Supplier Certification
Certification itself by Lead Company to its Supplier Companies
WHAT SDP OFFERS TO LEAD COMPANY AND SUPPLIER COMPANY?
(CONTINUED…)
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
Long Term
Corporate Supply (Globally)
Certainty
Joint Investment
Strategic Partners
Mid Term
Training & Information
Communication
Technical Assistance
Short Term
Delivery Time
Timely Payment
Quality
Flexibility
Cost Reduction
Competitive Price
• Outcome Levels: SDP investment must show specific Returns.SDP Perspective: Measure Short-term Activity, Mid-term pipeline and Long-term growth
• Building Trust: Flexible relation and communication, between Lead Company and Supplier Company
• Information and linkage with support institutions to develop SME´s
REQUIREMENT FOR PARTICIPATING COMPANIES IN SDP
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
Not reluctant to involve different areas/departments of the company
Wish to Improve purchase practices and promote Plans of Improvement
Timely Delivery of required information for diagnostic, impact assessment and subsidy
Legalization: Wish to change/Implement legislation, regulation, systems or procedures
Improving environmental performance and sustainability within the supply chain
Wish to Implement Supplier Certification System (for Lead Company)
Market Access: Have no Links with sustained market and have limited Business Vision
Finances: Limited access to Financial resources and have Poor Financial Controls
Operation: Have Low quality products, under-developed process and Non Calculation of Production costs
Formation of groups without strong links and Limited distribution of responsibilities
COST, SUPPORT & SUBSIDIES FOR LC & SC’S
D E V E L O P M E N T P R O G R A M M E S U P P L I E R
Description Small Company Medium Company Large Company
No of Employees 10-35 36-99 100+
Productive Assets 2-20 Million PKR 20-40 Million PKR 40 > Million PKR
Company Supplier Company Medium Lead Company Large Lead Company
Cost of Implementing SDP 135,000 PKR 450,000PKR 900,000 PKR
Signing the Agreement
Delivery of the Diagnostic
Delivery of the Improvement Plan
Implementation progress of
Improvement Plan (in half).
Receiving of the Final Report to satisfaction
of the companies
Payments that will made against following products
20 % payment at each stage mentioned below:
1 2 3 4 5
THANK YOU !
UNDP - Supplier Development Program