Supplier development programs support food and agribusinesses, particularly in developing regions, where they can help maintain high standards, reduce costs, foster innovation, and build more resilient and sustainable supply chains.
Many of these developing nations benefit from young and adaptable workforces, a growing middle class and abundant natural resources, which means they should be well-positioned to quickly adapt new technologies, expand domestic markets, and enhance global market competitiveness. Supplier development programs can further support these regions by optimising their agricultural and industrial processes, which improves efficiency and productivity, and leads to more sustainable and resilient supply chains.
In this article, we will discuss what supplier development programs are, how they can support developing regions, and the critical role they play in enhancing sustainability, improving supply chain efficiency, and driving innovation in the food and agribusiness industry.
Benefits of supplier development programs
Well-designed supplier development programs offer several advantages for agrifood businesses.
One of their main benefits is that they provide producers with the opportunity to work directly with suppliers to improve product quality and safety. By helping suppliers meet higher food safety and quality standards, food producers can reduce contamination risks and ensure compliance with regulatory requirements. For instance, in South Africa, SPAR’s supplier development programme assists micro and small food suppliers in achieving compliance with food safety standards by offering training in various areas, including resource efficiency and compliance with environmental regulations. This inevitably leads to supply chains that are less prone to disruptions. Risks can be further mitigated against by developing alternate suppliers, and establishing strong contingency plans.
By building stronger supplier relationships and improving suppliers’ capabilities, companies can minimise the impact of supply chain disruptions caused by events like natural disasters, market fluctuations, or global crises. Businesses can also reduce waste and improve manufacturing processes by collaborating with suppliers to eliminate inefficiencies. In a food and agribusiness context, this might involve streamlining ingredient sourcing, enhancing packaging practices, or improving transportation efficiency. This often translates into significant cost reductions, with companies that implement supplier relationship management programs realising cost savings of up to 8%. Unilever’s sustainable living plan (where Unilever works closely with suppliers to reduce waste throughout the supply chain) has reportedly reduced costs by more than $1.5 billion for the company since 2008.
Investing in suppliers has the added benefit of ensuring that suppliers remain committed, responsive, and aligned with business objectives. This partnership creates a dependable supply chain that can adapt to changing requirements and support long-term business growth. For example, over the last twenty years Starbucks’ have built support and ensured that their suppliers are committed to their quality and sustainability standards through their farmer support centres. This investment has ultimately contributed to Starbucks’ long-term success by strengthening relationships with coffee farmers, improving the quality of their coffee, and stabilising their supply chain.
Supplier development programs can also help improve traceability, and verify sustainability claims, as they enable companies to track ingredients back to their source. For instance, Lidl, have also worked with their tea suppliers to source 100% of its own-brand black, green, and Rooibos tea from certified sustainable sources. Similarly, these programs also help food and beverage businesses collaborate with suppliers to develop unique products, such as organic or sustainably sourced options. This can enable the food producers to capture niche markets and set themselves apart from competition. For instance, Lidl’s “Kick Start” initiative enabled the food retailer to partner with local farmers and significantly increase their supply of locally sourced organic produce.
Supplier development programs can also help businesses support social causes, meet sustainability goals and drive eco-friendly work practices. For instance, in South Africa, the Black Business Supplier Development Programme (BBSDP) promotes economic inclusion and social transformation by providing grants and support services to black-owned small enterprises. Similarly, Exxaro’s Enterprise and Supplier Development (ESD) Program promotes sustainable and environmentally friendly practices by offering mentorship, training and financial assistance to local suppliers.
Challenges and considerations
Implementing supplier development programs can be challenging, with obstacles like limited resources, cultural differences, and varying levels of supplier capabilities all playing their part. Also, because developing these programs requires time and investment, a phased approach focusing on pilot projects and incremental improvements can make supplier development programs more manageable. Coca-Cola used a phased approach to great effect in its Project Nurture programme in East Africa. By starting with pilot projects to support mango and passion fruit farmers, they were able to overcome challenges and refine strategies as the program gradually scaled up.
One common barrier to implementing supplier development programs is the lack of technological infrastructure or expertise among suppliers. Foodtech and agtech are fundamental to improving operational effectiveness and efficiency, frequently forming a core component of supplier development programs. Some of the most widely used technologies include supply chain management systems, Electronic Data Interchange (EDI), data analytics and machine learning. Blockchain technology is also gaining traction for enhancing traceability and verifying sustainable practices. These technologies may not be readily accessible or understood by suppliers. For example, when Walmart implemented its blockchain-based food traceability system, it faced significant challenges because many of its smaller suppliers lacked the necessary technological capabilities and expertise. This gap hindered the adoption of the system, and required additional supplier support and training to ensure effective participation.
However, when successfully implemented these technologies offer significant advantages, shortening lead times, enhancing product quality and resulting in fewer tracking errors. Coca-Cola significantly improved their operational agility by integrating advanced technologies across their supplier development program. By leveraging technology and collaborating closely with suppliers, they were able to better monitor the movement of goods and materials, pinpoint bottlenecks, and streamline processes.
While these challenges may be daunting, the rewards are equally great. With proper planning, resource allocation, and alignment, food and agribusinesses can successfully implement supplier development programs that benefit both the company and its suppliers.
The future
The future of supplier development programs looks bright. Across the globe, supplier development programs are being strategically deployed to meet emerging demands in the food and beverage industry. As regulatory and consumer demands increase, investing in supplier development programs will allow organisations to adapt to change, enhance product quality, and ensure compliance.
For over two decades, Farrelly Mitchell has dedicated itself to creating a more stable, equal, and sustainable food system. We have overseen and implemented countless projects all over the globe. We work with some of the worlds’ most renowned institutions and organisations to develop programmes that are locally relevant, grounded in best practices, aligned with wider policies, and quantifiably successful across a range of metrics. Ourprogram development and implementation experts specialise in supply chain optimisation, community empowerment, developing market linkages and adding value. Contact us to discover how we can help you create lasting value in your food and agribusiness processes.
