The organization buys goods and services from third parties or suppliers. How it involves, begins, achieves and connects with its suppliers is crucial to success. Every organization consistently improves the overall performance of its suppliers.

What is Supplier Management?

Suppliers are self-governing legal units that exist outside the borders of one’s organization. The supplier management system ensures that value is received for the money that an organization spends with its suppliers.

What is a supplier management process flow?

There are various steps involved in the process of supplier management to enhance the effective buyer-supplier relationship. The four steps of the supplier management process are mentioned below:

1. Qualification

Supplier qualification, being the first step of the vendor management process, is used to evaluate suppliers and define whether they can provide necessary goods or services to the buyer as per the standards set by them.

2. Classification

Supplier classification is the process of segmenting based on a predefined set of metrics, such as supply risk, quality, profit, performance, etc.

3. Collaboration

Supplier collaboration is the process for the mutual development of vendors and buyers through the process of improvement and innovative product/service.

4. Evaluation

Supplier evaluation is the final stage of the flow of the process of vendor management and used to analyze the performance of suppliers and ensure that they are meet the terms and conditions of the contract.

Benefits of Supplier Management

Achieving Cost Savings

Improving Supply Transparency

Tracking Compliance

Evaluating Supplier Performance

Assessing Supplier Risk

Building a Supplier Management Process

It is necessary to establish a supplier management system once the need and benefits of supplier management are identified. This will guide the organization about the strategies which it has to deploy for the betterment of suppliers which are associated with it.

Way Forward

The supply management system, in the years to come, will enable closer integration and collaboration with key suppliers. It will become more efficient and transparent. With the help of technology, supply chains will be able to distinguish within a market that demands growing speed and accessibility.