In the previous blog we spoke about the significance of supplier management and why it is moving at the heart of procurement.
In this blog we will discuss how to put Supplier Management in practice
For procurement to develop and build on a supplier focus there must be focus on the right mental attitude, hard data, processes and systems.
The supplier relationship generally goes through the following stages.
- On-boarding
This is when the suppliers either start doing business with the organization, or express an interest in doing so, perhaps by applying to be on an approved supplier list or expressing interest in a particular competitive process like a tender. At this point, relevant information about the supplier needs to be obtained.
- Verification of information
This needs to be considered on a risk-driven basis. If the supplier or the work they are going to do is particularly high-risk, then some verification process that goes beyond simply taking the supplier’s word on the information they provide may need to be considered.
In recent years, the scope of information has increased to include environmental information like CO2 emissions, water usage etc., social information like health & safety, labor practices etc., quality & consumer information like Product failures / recalls etc., and regulatory information. Once the process reaches the stage of sourcing events and exercises, a supplier-centric approach can ensure the appropriate supplier information is used to help run such processes effectively and efficient.
- Supplier performance
Once a supplier is active, there is a need to track and measure against the contract and perhaps in terms of wider requirements to ensure that supplier performance is up-to mark and further facilitate supplier growth.
- Supplier relationship management
Where a supplier holds multiple contracts with the organization, there is a need to understand what they are doing across the entirety of the organization and see how they fit into the wider category, business unit or geographical landscape (not forgetting that ”category management” picture). And where the supplier justifies a supplier relationship management approach that needs to be structured and managed, with further implications for communication, activities and information management.
In the next blog we will explore what are the benefits of good supplier management practice.
