SUPPLIER DEVELOPMENT PROGRAMME

POWERED BY: UNDP, PAKISTAN

Building Comprehensive Markets

& Generating Equitable Growth

M Bilal Khattak SDP Consultant

CONTENTS

What is SDP?

Mission & Vision

Why SDP?

Estimated Time with Stages

Methodology

What SDP offers to Lead Company and Supplier Company?

Requirement for Participating Companies in SDP

Cost, support & subsidies for Lead Company & Supplier Companies

SUPPLIER D EV E LO P M E NT PROGRAMME
WHAT IS SDP?

What is Supplier Development?

Supplier Development is the process of working with certain suppliers on a one-to-one basis to
improve their performance (and capabilities) for the benefit of the buying organization (Lead
Company).
What is UNDP SDP (Supplier Development Program) ?
UNDP Pakistan aims to Implement system through SDP:
That transforms the business relationship between a Leader Enterprise (Large and Medium) and
its suppliers
Enhance the Pakistani economy by strengthening the competitive capacities of different sectors
Main Objectives of SDP
To increase the social and economic profitability of participating enterprises
Promote the incorporation of latest technologies, teamwork, entrepreneurial and associative
integration practices in the companies that promote their development and give them a long-
term viability.

SUPPLIER D EV E LO P M E NT PROGRAMME
SDP MISSION & VISION
MISSION
To Contribute to increased
competitiveness and creation of
decent work in small and medium
enterprises in Pakistan
To strengthen value chains, based on
the implementation of an efficient
methodology
To build strategic relationships with
supply companies demanding goods
and/or services
SUPPLIER D EV E LO P M E NT
VISION
Become a lead and reference
programme in development of
suppliers for Pakistan, that helps
improve the performance of strategic
sectors and generates opportunities
by articulating them with the market,
through capacity building of small and
medium enterprises
PROGRAMME
WHY SDP?

The Supplier Development Programme can:

Reduce the Cost: Cost reduction that helps to maintain the suppliers profit margin
Resolve Serious Quality issue: Quality improvement that both reduces reject costs and/or increase
reliability of buyers goods or manufacturing processes
Develop new routes to supply
Ensure quality control at supplier locations
Increase profitability of all the participants in the chain:
Boost Company Sales
Develop a product or service not currently available in market place
Generate competition for a high price product or service dominating market
Improve business alignment between the Lead Company and Supplier
Better Policies, Purchasing Practices, Strategy, and trained people to replicate the SDP to the rest of
the production chain

SUPPLIER D EV E LO P M E NT PROGRAMME
STAGES WITH ESTIMATED TIME

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6

Design
Implementation Documentation
Promotion & Implementation & Follow Up &
Formalization Diagnosis Interaction Plan Stage Systematization

10 Months

Stage 1 Stage 3 Stage 5

S Month 1-3 Month 4-5 Month 8-10 WIN
D
Month 0-1 Month 3-4 Month 5-8
WIN
M Stage 2 Stage 4 Stage 6

SUPPLIER D EV E LO P M E NT PROGRAMME
HOW DO WE DO IT?

SDP Comprise of Six Stages

1 3 5
Design of Documentation &
Diagnosis
Establish Strategic Improvement Plan Replicability
Line of Action Validate Diagnosis Implementation of
Identification of Improvement Plan,
Agree on Activities Buying Process Set Priorities Establish Improvement Action Plan and Action Documentation of
Set Common Plan Lines Results
Identify
Goals Establish Work plan & Analysis for possible
Improvement Responsibilities replicability
Promotion & Opportunities
Interaction Implementation
Formalization

2 4 6

SUPPLIER D EV E LO P M E NT PROGRAMME
HOW DO WE DO IT? (CONTINUED)

In order to create a win-win situation

through SDP:
One or Two SDP Consultants intervene a One or Two SDP Consultants
Production/Value chain Specialized Consultants
Duration : 10 Months
Production/Value Chain SC
SC SC
1 Lead Company, (LC)
Up-to 10 Supplier Companies, (SCs) SC SC
One or Two SDP Consultants LC Win Win
Specialized Consultant (Where Required) SC SC
Supplier Development Methodology
(SDM) is implemented SC SC
SC
Later the Leader Enterprise continues to
implement SDM with rest of supplier(s) in
chain. Value Chain

SUPPLIER D EV E LO P M E NT PROGRAMME
WHAT SDP OFFERS TO LEAD COMPANY AND
SUPPLIER COMPANY?

Lead Company achieves Supplier Company achieves

Develops more reliable suppliers on price,
quality, delivery times, services
Improves LC productivity by greater
performance thanks to reduction of faults
and delays
Better policies and purchasing practices
Flexibility in its supplies
Strategy, SDP Manual, and trained people to
replicate the SDP to the rest of the
production chain
Vision and clarity about its sales (it allows
investments/ improvement projects)
Increases sales and/or profits
More competitive prices
Improves customer satisfaction: price,
time, quality, service, Technical assistance
Culture of quality and continuous
improvement

Certification itself by Lead Company to its Supplier Companies

ASSC : Assessment System of Supplier Certification

SUPPLIER D EV E LO P M E NT PROGRAMME
WHAT SDP OFFERS TO LEAD COMPANY AND SUPPLIER COMPANY?
(CONTINUED)

Building Trust: Flexible relation and communication, between Lead Company and Supplier Company
Information and linkage with support institutions to develop SMEs
Outcome Levels: SDP investment must show specific Returns.
SDP Perspective: Measure Short-term Activity, Mid-term pipeline and Long-term growth

Long Term
Mid Term
Corporate Supply
(Globally) Short Term
Training & Information
Certainty
Communication Delivery Time
Joint Investment
Technical Assistance Timely Payment
Strategic Partners
Quality
Flexibility
Cost Reduction
Competitive Price

SUPPLIER D EV E LO P M E NT PROGRAMME
REQUIREMENT FOR PARTICIPATING COMPANIES IN SDP

Not reluctant to involve different areas/departments of the company

Wish to Improve purchase practices and promote Plans of Improvement
Timely Delivery of required information for diagnostic, impact assessment and subsidy
Legalization: Wish to change/Implement legislation, regulation, systems or procedures
Improving environmental performance and sustainability within the supply chain
Wish to Implement Supplier Certification System (for Lead Company)
Market Access: Have no Links with sustained market and have limited Business Vision
Finances: Limited access to Financial resources and have Poor Financial Controls
Operation: Have Low quality products, under-developed process and Non Calculation of Production costs
Formation of groups without strong links and Limited distribution of responsibilities

SUPPLIER D EV E LO P M E NT PROGRAMME
COST, SUPPORT & SUBSIDIES FOR LC & SCS

Description Small Company Medium Company Large Company

No of Employees 10-35 36-99 100+
Productive Assets 2-20 Million PKR 20-40 Million PKR 40 > Million PKR

Company Supplier Company Medium Lead Company Large Lead Company

Cost of Implementing SDP 135,000 PKR 450,000PKR 900,000 PKR

Payments that will made against following products

20 % payment at each stage mentioned below:
1 2 3 4 5
Implementation Receiving of the Final
Signing the Delivery of the Delivery of the progress of
Improvement Plan (in
Report to satisfaction
Agreement Diagnostic Improvement Plan
half). of the companies

SUPPLIER D EV E LO P M E NT PROGRAMME
 THANK YOU !

UNDP - Supplier Development Program