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The current trend in the manufacturing industry is for large companies to focus on core competencies and to outsource more design and manufacture. Combined with the rationalization of the supplier base, this has meant that companies are increasingly dependent on key suppliers to continue providing competitive subsystems and subassemblies which incorporate advanced product and process technology. Suppliers in turn are reliant on their customers for information for innovation. This paper discusses the potential to enhance the technological capability of the supply network through supplier development (SD) schemes. Case studies of SD in the UK aerospace and defense sectors are presented in order to establish whether SD is enhancing technological capability in small companies in the UK supply base. The formal processes of SD are found to have little direct impact on supplier technological capability, but instead have an important indirect effect-primarily through strengthening relevant communication channels. There remains an opportunity for large companies to utilize SD to promote better technology management practices.