pared to focus on quality improvement, which leads to further ben-
efits of reliability of supply and lowered costs – the so-called ‘cost of
quality’.
Recognizing that significant benefits can accrue from closer rela-
tionships with suppliers, many organizations have now embarked
upon programmes of ‘supplier development’.5, 6The simple idea
that underpins the concept of supplier development is that by
working more closely with suppliers significant improvements in
their performance can often be achieved. The improvements can
come in the form of lower costs through greater operational effi-
ciency, higher levels of product quality, lower inventories, the adop-
tion of ‘paperless’ transactions through electronic data interchange
and joint product development.
One of the first companies in the UK to see supplier development
as a critical business process was Nissan. When they opened their
first European vehicle assembly plant in the North East of England
in the late 1980s, they sought firstly to minimize the number of
first-tier suppliers they did business with – under 200 – and sec-
ondly to establish cross-functional Supplier Development Teams to
work closely with those suppliers on product and process
improvement. These teams comprised a mix of Nissan engineers
and specialists whose goal was to seek out and exploit opportuni-
ties for creating a ‘seamless’ supply chain that would enable Nissan
to gain significant advantage in cost and quality terms. It was
claimed at the time that Nissan had, as a result of this approach, a
£600 per car cost advantage over other European car manufactur-
ers.^7 Not surprisingly perhaps, this idea was rapidly adopted by
others in the industry!
Another manifestation of the idea of supplier development is the
creation of supplier associations. Hines^6 has defined a supplier asso-
ciation as:
a mutually benefiting group of a company’s most important sub-con-
tractors, brought together on a regular basis for the purpose of co-
ordination and co-operation as well as to assist all the members to
benefit from the type of development associated with large Japanese
assemblers such as kaizen, just-in-time, kanban, U-cell production and
the achievement of zero defects.The idea is to bring together suppliers to form a ‘club’, the purpose
of which is to benchmark and learn from each other as well as from
The supplier and alliance market domain 167