What Is Supplier Management?

Why is Supplier Management important?

What is supplier relationship management?

What is supplier lifecycle management?

What is supplier information management?

The supplier management process

  • 1: Qualification — Companies usually evaluate their suppliers prior to them being onboarded to determine their capabilities to provide the goods or services needed, This might include gathering documentation from a supplier (such as insurance) or establishing their values to ensure that they are a good fit for the company.
  • 2: Onboarding — This can be a lengthy process depending on a company’s current processes. Relevant stakeholders need to be informed, systems updated and new contracts potentially created. This stage often involves multiple departments, such as finance and legal to ensure current processes are adhered to.
  • 3: Collaboration — Collaboration between vendors or suppliers improves relationships and commercial value (see Supplier Relationship Management above)
  • 4: Evaluation — Used to measure a supplier’s performance or risk and determine if they’ve met the commercial agreements within a contract. Companies will usually have their own processes of how they evaluate their suppliers

Benefits of Supplier Management

  • Reduced risk — A supplier Management System can reduce the chance of risk as well as providing the benefit of eliminating supply problems via regular supplier evaluation and supplier information insights
  • Reduced costs — A proper supplier relationship management process can lead to stronger communication between a company and a supplier which in turn drives compliance and confidence. This can eliminate certain risk elements and also results in the additional business being awarded to a supplier, resulting in better economies of scale.
  • Transparent pricing — Properly managed suppliers will usually have commercial agreements in place with a strong relationship behind them, resulting in companies being able to take advantage of fixed or discounted pricing, economies of scale, and other qualifying criteria.
  • Consolidation of suppliers — A consolidated supplier base allows companies to reduce the number of suppliers they purchase from, offering increased business to suppliers they have a stronger relationship with, driving economies of scale, and also reducing the number of invoices they need to process



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