Supplier management is a structured program to manage suppliers and improve their impact on the buyers business. It involves identifying, selecting, and managing appropriate suppliers and thoroughly evaluating their performance to ensure they provide the best value to the business. The focus of supplier relationship management is the development of two-way, mutually beneficial relationships with strategic supply partners to deliver greater levels of innovation and competitive advantage than could be achieved by operating independently or through a traditional, transactional purchasing arrangement.
Supplier management includes managing vendor deliverables, working collaboratively to co-develop new processes, managing compliance as well as payment of invoices. Underpinning disciplines which support effective supplier relationship management include supplier information management, compliance, risk management, and performance management.
The purpose of supplier management is to ensure that a business gets the maximum value it is spending on its suppliers. Some benefits of supplier management include reduced risk, including invoice fraud, and eliminating supply problems as efficiently as possible. When a supply chain is consolidated, buyers can reduce the number of suppliers they work with, streamlining the purchasing process and making budgeting easier.
Supplier management is a crucial aspect of any business, and it involves procurement and supply chain activities related to building mutually-beneficial relationships with suppliers, including managing interactions with third-party companies and developing strategies for various types of supplier relationships. The process of collecting, maintaining and applying data related to a business’s suppliers, based on extensive communication received from those suppliers, is also part of supplier management.
In summary, supplier management is a comprehensive process that involves identifying, selecting, and managing appropriate suppliers, evaluating their performance, and building mutually-beneficial relationships with them to ensure that a business gets the maximum value it is spending on its suppliers.
