The Importance Of Supplier Development

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2.5.4. Supplier development: The third approach to achieve supply chain effectiveness is to develop collaborative relationships with suppliers. To clarify, Supplier development programs can remarkably help lessen risk and enhance efficiency and plays an important role in promoting performance improvement and contribute strategically to the overall organizational effectiveness. Supplier development enables companies to better apply their resources, enhance the value added, and allows manufacturing firms to be more effective in facing changing needs. Therefore, outsourcing allows firms to exploit the capabilities and utilize supplier technology to shorter product development and manufacturing cycle time in enhancing supply chain efficiency (Kurniawan et al., …show more content…

Risks in supply chain: Risk management controls activities to decrease vulnerability. To explain, supply chains are vulnerable to risks arising from coordinating problems in supply and demand (Kleindorfer and Saad, 2005). Handfield and McCormack (2007) defined operational, network, and external factors as categories of supply chain risks. Operational risk is determined as the risk of loss originating from insufficient or failed internal processes, people, or systems. To illustrate, quality, delivery, and service problems are instances of operational risks. Network risk is determined as risk originated from the structure of the supplier network, such as ownership, individual supplier strategies, and supply network contracts. External risk is determined as an event driven by external forces such as earthquakes, weather, regulatory, political, and market forces. Uncertainty is another risk that enhances costs due to overreactions throughout the supply chain (Childerhouse et al., 2003). Risk management culture positively moderates the effects of (a) supply chain visibility (b) supply chain flexibility, (c) supplier development, and (d) inventory control on supply chain effectiveness (Kurniawan et al.,

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