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| UNIDO Supplier Development Program in India |
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Introduction
The global automotive component industry is in the middle of a transformation process, which influences not only large and global supplier companies in the developed world but also the supply industry in the developing world. Global trends, such as outsourcing strategies of multinational manufacturers, the globalization process, opened up markets, emerging new business and technology trends demand that suppliers adopt new approaches. Yet, these developments in the supply industry only follow these new trends in the global vehicle manufacturing industry. These trends pressures from the vehicle manufacturers (OEMs) on their parts, component and system suppliers.
As the market pressure towards vehicle manufacturers increases, they also increase the pressure on their suppliers in terms of price, quality and services. There are also additional changes in the supply system and structure, which affect the component suppliers. The number of parts, components and systems, which are outsourced by the vehicle manufacturers, is increasing continuously. Generally, this trend leads to growing importance of suppliers in the automotive industry, which will change the relationship between OEMs and suppliers as well as among suppliers themselves. However, not all suppliers will be in the position to take advantage of these opportunities. |
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| What is a Supplier Development Program? |
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Supplier development is a procedure by a company to help improve its suppliers’ capabilities. More specifically, it may be interpreted as a firm’s attempt to transfer (or replicate) some aspects of its-in-house organizational capability across firm boundaries. In automotive industry, theoretically automakers may send their own engineers to the supplier’s shop floor to help to solve a problem with a specific component in order to meet the product launch date. Or, they may provide training courses for suppliers’ employees in techniques such as Quality Circles, Value Engineering and Simultaneous Engineering. They may also ask a supplier to work on specific production line for extended period with a view to learn to achieve cost reduction, quality improvement, etc…
Supplier Assessment is one strategy, which means that a buying firm makes an id-depth evaluation of suppliers’ quality in delivery, cost, technical and managerial capability. An important part of the assessment process is to provide the suppliers with feedback so that they know what the buyer expects and also to provide the supplier with directions for improvement.
Supplier Incentives are another developing strategy within this area. The focus in this strategy is to give the supplier extended business if they can achive a certain goal. These market based incentives are awarded based on a supplier’s performance and designed to make the supplier perform even better.
Competitive Pressure is the third strategy and is applied by buying firm to its suppliers when it is using more than one supplier. The aim is to buy from the supplier that is most competitive on the market and much focus is on low prices.
Direct Involvement activities is when buying firm directly involves itself in the supplier development effort and necessary investment by the buying firm in the supplier through activities such as training and education of a supplier’s personnel.
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| UNIDO SDP in Pune |
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UNIDO supplier development program is a broad concept aimed at strengthening the performance of subcontracting firms not only by enabling them to acquire the skills and capacities required by the main contractor but also raising their awareness.
UNIDO designed this SDP for the SMEs in automotive sector in Pune who would like to become a supplier for local and international auto makers in the country and abroad and/or who would like to strengthen their linkage with already existing customers.
UNIDO SDP Model is differentiating from existing SDPs already applied by the auto makers in the sector. In this program there will be basically three main focuses;
- Readiness for OEM Markets; Automakers expectations, strategies with suppliers
- Supplier strategies; strategies independently without clients, positioning strategies
- Case study: case study for an OEM’s supplier development
UNIDO international and local experts’ teams will select a number of companies to work with and transfer the above mentioned knowledge through the following methodologies;
- Seminars, workshops, classroom trainings
- Shop floor visits; working one by one in some cases
- Manuals, training documents, presentations
- Customer visits(OEM and Tier1)
In this project, beside the international and local experts there might be also automakers’ experts to assist on particular topics.
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| Target Group |
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The beneficiaries of the Supplier Development Program (SDP) will be the industrial enterprises particularly small and medium-sized automotive component manufacturers, the core target group will be the 1st and 2nd tier suppliers in Pune region. It is foreseen to work with around 25 companies. Indirect beneficiaries will be the partner institutions who are cooperating with UNIDO during this program.
Selection criteria of the participant companies at the primary level;
- Automotive subcontracting company working for OEMs (vehicle manufacturers) and/or Tier1
- TS/ISO 16949 certified, at least ISO 9001
- Minimum 100 employees,
- Export to developed markets and/or Company aims to export to European market?
- Engineering and product development department,
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| Expected Outcomes |
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Supplier Development refers to an organization’s effort to create and maintain in a network of competent suppliers. From a narrow perspective, it can be defined as identifying new sources of supply where no adequate ones exist. Defined more broadly, however, supplier development also involves a long-term co-operative effort between a buying firm and its suppliers to upgrade the suppliers’ technical quality, delivery, innovation and product development, cost capabilities and the foster ongoing improvements. The ultimate goal of these programs is to form a mutually beneficial relationship that will help both firms compete more effectively in the marketplace.
The elements of successful supplier development are;
- A long term commitment
- Both customer and suppliers to be proactive
- Both parties to integrate key functions and activities
- A commitment to developing and maintaining co-operative and close relationships
- A clear and well-structured framework for determining cost, price and profit for both sides
- A win-win philosophy both parties must stand to gain from the supplier’s development approach
- Continuous improvements in all spheres of their activities
At the end of UNIDO Supplier Development Program in Pune, it is expected to experience the following developments in the working group;
- able to start to work as a supplier of local or international OEMs
- able to strengthen their existing relation with the OEMs
- able to solve the problems facing with the existing OEMs
- able to leverage the position from supplier to strategic partners(more value added products)
- able to upgrade the performance and capabilities of 2nd Tier suppliers
Duration of the project: Total project time is 16-18 months.
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East Block-7, Level-5, R K. Puram, Sector-1, New Delhi 110066
Tel. : + 91.11.26102805 / 26164289
Fax : + 91.11.26712260
Contact Person : Mr. Bruno Valanzuolo
Email : b.valanzuolo@unido.org |
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