In part 1 and part 2 we discussed the importance of supplier management in today’s scenario and how supplier management can be put into practice, respectively.
In this blog we will talk about the benefits of supplier management good practices.
The most fundamental role of procurement is to find the best possible suppliers for the organization. This requires access to right information about potential suppliers & effective selection processes, in order to take the appropriate decisions.
However, it is important to understand that different stakeholders within procurement will have different objectives in terms of what they want out of suppliers. For instance, finance would be interested in understanding the supplier’s financial stability and capacity, supply chain finance opportunities, managing process compliance etc. Procurement need to consider this and look at how supplier management can provide various benefits to the different groups.
Benefits of supplier management good practice are;
- Improved risk management.
- Many of procurement’s internal stakeholders will understand the importance of managing key suppliers to provide additional value for the organization, through innovation, access to ideas or scarce resources, or improved performance.
- Cross-divisional, business wide approach to supplier management will have positive impact on the procurement function as well as on the organization.
- Procurement alignment with the thinking that suppliers are a key to their own performance and meeting their own objectives, will improve the manner in which suppliers are managed, and will be a powerful way to gain credibility with stakeholders and demonstrate that procurement execs are supporting and working with business and key functional colleagues.
In our next blog post, last in the series we will discuss steps to implement supplier management principles.
