· What is supplier management process?
· What’s the importance of implementing good vendor management best practices?
· And what are some vendor supplier relationship strategies you can adopt to streamline the supplier management process?
In this post, we tackle each of these issues. But first, what is supplier management anyway?
What is Supplier Management?
Supplier management goes by several terms. Also known as vendor management or supplier relationship management, it is the process involving:
– The selection of vendors
– The evaluation of supplier efficiency
– Supplier performance management
– And contract management
For a more comprehensive definition of supplier management, we turn to the one provided by the Chartered Institute of Procurement & Supply (CIPS):
“Supplier management is the relationship formed between a buyer and supplier, subject to
the criticality of the goods or services being purchased and supplied into your organization determines the type of working relationship that you should look to form with your suppliers.”
What of the actual process itself? What does it consist of?
What is the Supplier Management Process?
The supplier management process simply seeks to secure maximum value from the services rendered by suppliers. The supplier management lifecycle process can be subdivided as follows:
Step 1: Supplier Selection
This initial step involves the selection of vendors and qualifying them against a pre-determined set of criteria.
Step 2: Performance Monitoring
The second step in the supplier management process has to do with evaluating the suppliers’ performance. This may include process reviews, improvement plans, and discussions on exit strategies.
Step 3: Supplier Classification
Once suppliers have had their performance evaluated, they are classified. Classification is diverse but may include terms such as certified supplier, partnership, non-approved vendor, approved supplier, preferred supplier, and so forth.
Step 4: Partnerships and Alliances
The final step in the supplier management process lifecycle centers around the buyer taking time to come up with strategies to grow and develop the vendor supplier relationship, partnerships, and alliances.
Now aware of what supplier management process is we can shift our attention to why we should apply supplier management within procurement operations.
Why Should You Implement Supplier Management?
No business is an island. Whether you’re a small business, medium, or large enterprise, you’re always in contact with vendors on some level.
It’s in your business’s best interests to learn good supplier management best practices. And by best practices, we’re talking about things such as
· Adopting supplier management systems that will streamline operations between you and the vendor.
· Establishing Key Performance Indicators to evaluate suppliers so you can keep improving the vendor supplier relationship.
· Identifying risks along the supply chain and tackling this head-on.
· Engaging in regular direct communication with your vendors.
Great, but how should this implementation be done? Let’s take a look.
How to Implement Good Supplier Management Best Practices
Every business has its own modus operandi regarding supplier management. With that said, there is no singular right strategy. What’s best for your enterprise might not be the right approach for the next one. However, here are some noteworthy strategies that you may want to carefully consider:
1. Adopt Automated Spend Analytics Systems
Procurement teams worth their weight are concerned with the company’s bottom line. They want to know how they can cut back on costs. They want visibility to see where money is being spent.
Integrating automated spend analytics systems is one sure-fire way to gain this desired visibility. Through these systems, you can reveal hidden costs, keep reckless spend in check, and use the derived data to improve the vendor supplier relationship.
2. Ensure Open Communication Channels with Vendors
As a procurement specialist you want to keep your communication channels open with your vendors. This is good supplier management best practice.
Doing this allows both sides to value map together, to find ways to make the relationship profitable, and mutually beneficial. This complementary and reciprocal respect will foster a robust vendor relationship.
Fortunately, there exist dedicated procurement platforms with inbuilt communication channels such as ProcurePort’s suite of solutions.
This software allows you to conduct all your communication on a centralized platform. This is advantageous as you avoid the tedious back and forth that’s often the case on independent emailing and messaging platforms.
3. Integrate Intuitive Contract Management Solutions
When it comes to keeping operations smooth with your vendors, how you handle your contracts will either make you a favorable partner or not.
With the average organization dealing with scores of suppliers, it can become difficult to keep an eye on every contract, deadline, and specification.
For this reason, high-profile procurement teams looking to streamline purchasing and supply chain management in 2020 will integrate contract management solutions like those from ProcurePort into their vendor management process.
The Bottom Line
Supplier management provides procurement teams with a great way to foster and improve the vendor supplier relationship. And knowing what is supplier management process allows you to identify areas within the process lifecycle you can target for refinement.
In addition, owing to contemporary technological offerings and procurement software, procurement specialists are now armed with the tools they need to develop their vendor relationships and effectively manage all the different process functions with less stress.
For reliable, robust, and innovative supplier management solutions look no further than ProcurePort. Our software is trusted and used by businesses and organizations such as UNOPS, HUD.GOV, and conEdison.
To discuss supplier management software with a consultant or to schedule a demo of our solutions, contact us today.
