Canadian companies are outsourcing their manufacturing activities in order to take advantage of lower wages in developing countries. In some cases, the final assembly is the only activity still being performed in Canada. In other cases, even the final assembly, is outsourced. The products are sold on the North American market and the companies reputation rides on their ability to deliver products at the level of expectation of the local consumers.
This situation is helping define a new type of competence that will differentiate the successful companies in their ability to respond to the global market demands. The companies that focus on the
creation of effective and efficient suppliers' development programmes will benefit from a new and sustainable competitive advantage.
In 1985, Michael Porter, introduced, in his book ‘The Competitive Advantage’, the concept of the Value Chain. He suggested that activities within the organisation add value to the service and products that the organisation produces, and all these activities should be run at optimum level if the organisation is to gain any real competitive advantage.
The supply chain is an integral part of the organisation and as a result the firms have to shift their focus into the realm of supply chain design and supplier development. This implies that the supplier selection decisions should be guided not only by operational factors but also by strategic factors such as flexibility, the capacity to innovate, and the supplier’s business-technology alignment.
Some large-size companies have supplier development programmes in place. Most of these programmes are glorified "Supplier Quality Award", in which suppliers receive an award for a certain level of quality and on-time delivery. While there is nothing wrong with doing this, it falls short of what is truly needed in a successful supplier development programme.
At a minimum, a supplier development programme should be aimed at aligning strategies across the value chain, lowering supply chain total cost, increasing profitability for all supply chain participants, increasing product quality, and achieving near-perfect on-time-delivery at each point in the supply chain.
Supplier development is all about providing suppliers with what they need to be successful in the supply chain and it is today’s fundamental competitive advantage.
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Dan Georgescu is a well-known supply chain management expert who specialises in supplier development and an accomplished public speaker (ca.linkedin.com/in/dangeorgescu).
As the Supplier Technical Assistance Resident (Global Purchasing - Ford Motor Company), he is in charge of supplier development for the Oakville Assembly Complex.
Dan published ‘Making Supply Chain Design the Rational Differentiating Characteristic of the OEM’s’ in the International Journal of Production Research in 2007. His research interests are Knowledge Propagation in the Value Chain and Supplier Development as a Sustainable competitive Advantage.
He graduated with the Gold Medal for Academic Excellence from the Wilfrid Laurier Supply Chain Management MBA programme. He holds a Master of Science degree; he is a certified Six Sigma Black Belt and a Professional Engineer.
