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