Supplier Management (original) (raw)

What is supplier management?

Supplier management is the collection of processes that enables a company to identify, qualify, onboard, transact and collaborate with the right suppliers for their business.

Today’s supply chains constitute a large, complex ecosystem of suppliers and trading partners, each of them adding value as they deliver goods and services to the marketplace. Global enterprises often rely on tens of thousands or even hundreds of thousands of suppliers. Companies implement a supplier relationship management process to manage this vast array of partnerships.

Why is supplier management important?

For companies in the product-delivery business, success depends on the ability to acquire, retain and effectively work with suppliers to meet customer expectations for quality products—delivered on time and in full. As much as 50% of a company’s value can depend on its supplier relationship (PDF) strength.

But as supply chains have become global networks of networks, supplier management processes have grown increasingly complex, time-consuming and costly. A strong dependence on manual, paper-based processes, along with double entry of digital events and form filling has exacerbated these challenges—slowing execution, enabling human error and hindering agility.

Turbulent times greatly compound these difficulties. Recent events have spotlighted the critical importance of the ongoing relationships between a company and its partnerships and suppliers. These relationships are essential for maintaining agility and resiliency within supply chains.

Supply chain leaders have responded to these challenges. They are increasing their commitment to digitizing and modernizing supplier management processes. The numerous benefits include enhanced supplier verification, improved onboarding and stronger lifecycle tracking. Result: more effective supply chain relationship management.

Benefits of effective supplier management

Increase supply chain agility

Respond faster to unexpected marketplace events, new business needs and emerging strategic alliances with the ability to quickly identify, qualify, onboard and manage new suppliers.

Achieve cost savings

Drive new levels of efficiency and productivity—and reduce costs—by enabling frictionless supplier connectivity and collaboration.

Reduce supply chain risk

Mitigate risk—even in times of crisis—by eliminating transaction gaps and enabling multi-party visibility to minimize vendor disputes.

Key features of effective supplier management

Supplier collaboration

The digital transactions and human interactions are exchanged between an enterprise buyer and one or more suppliers. Together, they work to deliver the raw materials, parts or supplies used to produce a finished product for end customers.

Supplier onboarding

Supplier relationship management processes associated with discovering and validating suppliers, becoming interconnected with those suppliers, providing connectivity with relevant enterprise systems and enabling B2B transactions.

Supplier relationship management

Procurement and supply chain activities focus on building mutually beneficial relationships with suppliers. These activities include managing interactions with third-party companies and developing strategies for various types of supplier relationships (for example, an “arms length relationship”).

Supplier lifecycle management

Most supplier management activities, including selecting and hiring suppliers, onboarding those suppliers, managing and enforcing contracts, administering payments, handling terminations and more.

Supplier information management

The process of collecting, maintaining and applying data related to a business’s suppliers, based on extensive communication received from those suppliers.

What’s the future of supplier management?

The future of supplier management is a fully digital experience delivered through multi-enterprise supply chain business networks, direct connections with strategic suppliers and purpose-built blockchains for complex supply chain processes.

Supplier management will continue to build on digitization, trust, transparency and intelligence to improve data quality, ensure information immediacy and optimize processes. It will: