CIPS L4m6 Supplier Relationships · Free Practice Question Medium
Question 7
Lene Group plans to start a Supplier Development Programme (SDP) to help small and medium sized suppliers improve their performance and expand their business in key areas for the Group. Lara needs to discover the objectives and advantages of this programme for both the Group and the suppliers. What is a fact about supplier development programme?
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A
There is only one universal approach to supplier development
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B
The supplier development programme for developing suppliers should have measurable outcomes that benefit the business.
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C
All the Group’s suppliers must participate in a supplier development programme.
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D
Only the buyer’s willingness is required for supplier development programme, which is a one-sided activity.
Reveal correct answer
Correct answer: B
Explanation
CIPS defines Supplier Development as: "Supplier development is closely related to supplier relationship management and is the process of working with certain suppliers on a one-to-one basis to improve their performance for the benefit of the buying organisation."
Before any decision is made to implement supplier development the organisation's corporate needs and objectives need to be established. Purchasing and supply management professionals should be able to identify and prioritise by means of an appropriate method, the reasons for embarking on a supplier development process such as improving a supplier's performance, reducing costs and resolving serious quality issues. It is not necessarily only the best suppliers which should be eligible for development programmes - each supplier should be assessed on the basis of individual merit and potential. Suppliers of key supplies and services should be rated according to their current performance and their ideal, or preferred, performance as well as compared to other suppliers. This evaluation should also cover the relationship between the two parties e.g. the style of relationship and how this compares to the preferred type of relationship.
There is no single, universally applicable approach to supplier development; each situation needs to be assessed on its own merits. Supplier development projects should be capable of being assessed in terms of quantifiable business benefits. Suppliers involved in any supplier development programme should be encouraged to review and develop their relationship with the buying organisation.
Supplier development is a two-way activity in that it should be thought of as a joint buyer/supplier development. Purchasing and supply management professionals should possess expertise in supplier development; in particular they need to have the necessary interpersonal skills to be able to persuade colleagues and suppliers who may otherwise be reluctant to embark on a development programme.
Purchasing and supply management professional needs to have the ability to decide when it is time to bring a development project to an end.
Reference:
- CIPS L4M6 study guide page 17-18 / The new syllabus 2024
LO 1, AC 1.1
Discussion
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