When a company outsources a product or service to another company and that company that has been outsourced with the service/product performs poorly, there are ways to correct this. Hanfield and Krause (2007), argue that there are three ways to correct low services from the supplier: either improve the supplier, change the supplier or bring the process to internal developmemt. Hanfield and Krause (2007) further argue that it is better to developthe supplier becaue of cost and logistics. When undertaklinmg supplier development, it isimportant to ensure that both parties commit to the process both in labor and resources and cost. Supplier development is an important issue when it comes to improving the productivity of an organization. Supplier development can be defined as the process of working together with various suppliers in order to enhance their capabilities. Nissan undertook a research to find out the way forward so that they could have aligned goals for their suppliers that could be identified with theirs. What was coming out of the research is that there is need improve suppliers in order to have improved production process. Cogent was applied in the supplier development process so that Nissan could have a better brand in the end. While involving Cranfield University and Suppliers, Nissan came up with strategy of using cogent to involve suppliers in improving their supply chain process.
The foundations which need to be in place between Nissan and Suppliers are that of alignment of objectives together. The suppliers and Nissan should have common perspectives that they should strive to attain. They should all be aware of the various issues that affect productivity.
Objectives to be achieved
There are various objectives that should be taken into consideration when dealing with development in automotive industry. According to Cogent, there are things that should be followed for an organization to be competitive. These issues involve the fact that they should reduce the time that is taken for developing a product. This is can be done when the supply chain is effective and reliable. The supply chain is said to be effective when the suppliers are in alignment with the company over the time and quality of the products. Since most of the Nissan suppliers were in Europe, the Europe plant of Nissan undertook a workshop in Europe in collaboration with Cranfield University and Suppliers so that they could come up with issues that needed to be taken into consideration so that the Nissan product brand could be improved.
Another objective that is emphasized when an organization should remain competitive is that it should reduce the cost of developing. This cost of developing is contributed by the prices that suppliers fix for their products. This is something that should be taken into consideration. With developing of suppliers, the cost of the raw materials is bound to reduce and get improved. The cost of manufacturing should also be considered as a factor that should be taken into consideration. The capital/tooling expenditure is also another issue that comes into play.
Another objective is cost reduction. The main reason why development is an important process in considering competitive advantage is because most of the cost that are incurred for any given product will come from the cost of the materials. The quality will also be determined in the development phase. The performance of the product is also determined in the development phase. This makes the development phase a very important phase in determining the success if any given product.
Role of leadership
According to Hanfield and Krause (2007), it is important to have the assistance of a buyer when developing the capabilities of a supplier. This is because the supplier will have to be informed about the requirements of the buyers and they want achieved. In the case of Cogent, Nissan had to work with the suppliers so that they would understand what Nissan wanted.
Leadership in suppliers and Nissan helps in rolling out the initiatives of supplier development. Leadership should be involved as the process of effecting this change follows a top-down approach. The senior managers of the two companies should have a meeting so that they could look at the problems that face suppliers and the customer (Nissan). Senior management is to be engaged so that there is ultimate support in the whole management team. The senior leadership was involved so that they could be involved in the process of launching Cogent in the company. Leadership also helped to increase the chances of success for the planning and implementation phase.
Supplier development is important because most of the development process is determined by the suppliers. It has been found out that 70% of the development process is suppliers. This is the reason they should be developed. Their success is the success of the company. This is the reason why Nissan developed their supply chain by improving the suppliers. This was achieved by ensuring that the suppliers were taught on the supply chain process. There should be co-development where the organization is involved in the development process of the suppliers. This way, they will be involved in delivering quality products and services.
Commonality and conflict solution
The commonality is achieved by aligning the various issues. The perceptions, processes and targets are aligned so that Nissan and the suppliers have the same perceptions that they should strive to achieve, the same processes that should be improved and have the same target. The problems and challenges that were experienced between Nissan and the suppliers were resolved by aligning products, systems/processes and people perceptions. These three will ensure that the customer and the supplier are reading from the same script in the development process.
There are metrics that are used to measure performance to ensure that the targets have been achieved. These targets include cost, quality, delivery, development, management. These measurements will be measured to determine if a given supplier has undertaken the necessary changes.
Example from Nissan
Development is an important issue that should be measured in order to measure the success of a given supplier. In Nisan case, the measure of the development was undertaken by measuring drawings, trial parts and tests. These were measured by using the prioritization to check if the various measures were necessary and whether they were achieved. These were measured against cost, quality, development, and project management. Project management had a medium priority.
The supplier improvements that were achieved include better communication between Nissan and the suppliers. There was 10.3% in supplier improvement. This improvement, to Nissan meant that there was an 80% reduction in changes after the design has been undertaken. This means that the design process was thoroughly looked into. Because product development was focused upon, the reduction in changes was reduced. The design process involves steps such as drawings, trial tests and tests. All these are in the development process. After applying cogent, Nissan could now have better designs which did not have to be redesigned after they have been designed.
Risks and benefits
One of the risks is that the suppliers can transfer the improvement initiative to their other customers who could be the competitors of the company that is seeking these changes. Another risk is that the other sectors could be ignored and they may be left in the improvement process. One benefit is that suppliers will be aligned will share the same objectives with the company. This will bring an effective alignment process. The cost that will be incurred is that the development of the supplier might be met by the customer. This is because of the processes that will be followed.
I have learnt that the main reason why there is a co-development in any strategy that is being undertaken is so that there is alignment of goals of both the customer and the suppliers. When undertaking change or any strategy, there should be consistency in the customer internal processes and procedures. When undertaking the change processes, performance is the key tool that is used to steer improvement. I have also learnt that it is important to use a real product in order to get the focus and not losing it.
Bowman, C & Carter, S 2012, ‘Organising for competitive advantage’, European Management Journal, p. 423–433.
Brown, S & Eisenhardt, K 2005, ‘Product development: Past research, present findings, and future directions’, Academy of Management Review, vol 20, no. 2, pp. 343-348.
Carrie, A & Bititci, U 2011, Strategic Management of the Manufacturing Value Chain, Springer, London.
Coyle, J 2008, Supply Chain Management: A Logistics Perspective, Cengage Learning, London.
Dixon, P 2005, Building a Better Business: The Key to Future Marketing, Management and Motivation, Profile Books, London.
Donnelly, T, Morris, D & Donelly, T 2012, ‘Renault-Nissan: a marriage of necessity?’, European Business Review, pp. 428 – 440.
Evans, S 2000, ‘Improving co-development through process alignment’, International Journal of Operations & Production Management, vol 20, no. 8, pp. 979 – 988.
Hanfield, R & Krause, D 2007, ‘Supplier development’, Journal of Operations Management, vol 25, no. 2, pp. 528-545.
Jarrett, M 2009, Changeability: Why Some Companies Can Change Successfully – And Others Can’t, Financial Times/Prentice Hall, London.
Lee, G & Oakes, I 2012, ‘Templates for change with supply chain rationalization’, International Journal of Operations & Production Management, pp. 197 – 209.
Rajkumar, R 2012, ‘Challenges in real world optimisation using evolutionary computing’, Cranfield Ceres, pp. 45-51.
Ryals, L & Christopher, M 2012, ‘Supply Chain Strategy: Its Impact on Shareholder Value’, International Journal of Logistics Management, pp. 1-10.
Vinnicombe, S, Bank, J & kakabadesde, A 2004, Working in Organisations, Gower Publishing, Ltd., London.
Waters, D 2010, Global Logistics: New Directions in Supply Chain Management, Kogan Page Publishers, London.