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:
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.
Supplier classification is the process of segmenting based on a predefined set of metrics, such as supply risk, quality, profit, performance, etc.
Supplier collaboration is the process for the mutual development of vendors and buyers through the process of improvement and innovative product/service.
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
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.
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.