| The goal of supplier management is to ensure that selected suppliers meet the needs and objectives of the business. Supplier management encompasses supplier relationship management, which has to do with the management of the business and personal relationships; supplier performance management, which has to do with insuring that the supplier delivers on-time, at the requisite level of quality, and in the specified quantity; and supplier information management, which has to do with insuring that all information corresponding to a supplier, including location, contact, performance metrics, certifications, and contracts, is appropriately tracked and managed. It also includes supplier risk management, which has to do with insuring that supplier related risks are appropriately mitigated.
The goal of supplier relationship management is to streamline and increase the efficiency of interaction between suppliers and the organization. Supplier relationship management usually includes the implementation of technologies, processes, policies, and procedures to support the sourcing and procurement process. These technologies and processes usually focus on improving communication, increasing operational efficiency, and heightening visibility into real-time supply chain operations. Successful supplier performance management is a continuous cycle of supply and capability assessment, performance monitoring, and improvement identification. It’s all about connection, coordination, checking, control, and cultivation. Suppliers are integrated into an information exchange, buyer requirements are synchronized with supplier capabilities, scorecards are designed and implemented to generate metrics, performance is measured against SLAs, exceptional situations are identified, problems are resolved, and disruptions are minimized. A Supplier Information Management platform centralizes all supplier information in an organization, allows everyone (with rights) in the buying organization and the supplier organization to access and maintain it in a collaborative fashion, and allows buyers to define initiatives, such as sustainability, based on the information. Supplier Risk Management is the act of mitigating supplier based-risks, including quality failures, bankruptcies, and supply shortages. It includes production versatility, decision postponement, advanced sourcing strategies, business process management, incentives, price hedging, and forward-thinking contracts. For a deeper dive into supplier management, supplier relationship management, supplier performance management, supplier information management, and supplier risk management, see the following posts.
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Sourcing Innovation
Next Generation Supply Management Defined
