This includes, but is not limited to, identification, selection, and management of relevant suppliers coupled with a practical evaluation of their performance to ensure they are providing maximum value for the organization’s third-party requirements.
While the selection criteria depend on the type of the organization and its requirements from suppliers, standard measures include pricing, quality of past work, industrial recognitions, legal reputation, etc. Organizations also engage in RFQs, RFPs, and RFIs for selecting relevant suppliers, especially when the requirements are significant.
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Supplier Management–Benefits, Process, & Best Practices Globalization has swept today’s businesses off their foundations and has rendered the business processes more dynamic, competitive, and complex. Consequently, all organizations engage with suppliersfor the provision of various goods and services to maximize business performance.
Once you have evaluated suppliers and identified areas for improvement, supplier management can help you design development programs to support suppliers, especially the one that caters to long-term/crucial requirements and help improve their performance.
As supply chains and the resultant supplier relations becomes complex, the probability of detrimental supplier risks also increase. Supplier management helps in identifying and assessing the impact of the supplier risks and devising appropriate risk mitigation measures.
When you have a supplier management system in place, it will allow you to streamline valuable information and data regarding the lifecycle of the suppliers. It enables the organizations to have increased transparency into the number and type of engaged suppliers and how they are performing and helps in identifying areas of improvement and design strategies to improve their performance further.
Having strong supplier management practices will enable organizations to identify cost savings opportunities in the supply chain and scrutinize the quality of supplier output. This directly impacts and contributes to the company’s bottom line.
The supplier base of organizations is increasing – this is a consequence of a myriad of factors like increasingly globalized business processes that provide access to global suppliers, increasing the complexity of supply chains , increase in the scale of operations of organizations, etc. Due to the increase in the number of suppliers engaged with the organizations , managing the entire lifecycle of suppliers becomes difficult. Having a well-structured supplier management process in place will allow organizations to manage their multitude of suppliers with ease.
Leveraging supplier relationships in times of organizations or external distress to ensure business performance doesn’t fluctuate. An increasing competition which implies organizations have to identify and improve aspects of their business processes that can provide them a competitive advantage.
To get the most out of a supplier’s service , it is important to track and measure their performance. With regular communication and feedback, an organization develops a transparent relationship with the supplier, which helps in finding areas of improvements with quick solutions.