What is Supplier Management and What Are the Benefits?
Supplier management is a crucial part of what makes up your supply chain. It refers to the process of managing suppliers and their performance, as well as the coordination and integration with the rest of the company’s processes.
One way that companies can leverage supplier management is by using it for procurement purposes- this means purchasing products or services from suppliers at competitive prices.
This article will go over what supplier management entails, what are some benefits to taking advantage of this strategy, and how you can best utilize it in your own supply chain!
What is Supplier Management?
Supplier management is a set of activities that includes the process of managing suppliers and their performance, as well as the coordination and integration with what’s going on in other parts of your company.
This can include:
– Establishing what products you need to purchase from your supplier(s) for specific periods;
– Communicating what those needs are to make sure they’re met (e.g., negotiating prices or terms);
– Evaluating these suppliers’ performances periodically based on what was agreed upon in order to see how well they comply with the contract; – Discussions about what could be improved if necessary, including any potential consequences for not following through.
What Are Some of the Benefits?
The benefits of supplier management include:
You get visibility into what is happening with each and every product that goes out of your company by using a set process/systems, which can help minimize surprises and disruptions – especially when it comes time to plan future supply chains and budgets. You also get the ability to aggregate what you know about what is going on with your suppliers in order to make decisions.
You minimize risks by knowing what these potential risks are and how they affect your company – not just financially, but also for things like quality assurance. You can create risk management plans that will help reduce those risks as well. And lastly, it gives you visibility into what’s happening across all of your supplier relationships at once which allows you to proactively identify any possible problems before they become a disaster!
How You Can Use Supplier Management in Your Supply Chain
Inventory Management – what you are purchasing, what has been purchased and what is coming up in the near future
Cost Savings – by cutting out unnecessary costs from your supply chain
Quality Assurance – weeding out suppliers with quality issues or who have a higher risk of not meeting customer expectations. This will reduce risks that come as a result of vendors having these problems because they will be removed before it affects your company’s reputation on an account. It also allows you to measure supplier performance with supplier diversity metrics so when someone does fall short, you can work to correct those deficiencies going forward which makes sure it doesn’t happen again.
Risk Mitigation Plans – These plans allow businesses to identify potential risks and create scenarios for how this might affect their supply chain. This allows them to plan what they are going to do in the event that something goes wrong and what their response is if it does happen.
Loyalty – by working with suppliers who consistently deliver good quality product, you will build a relationship of trust which leads to increased loyalty from your supplier.
Increased Revenue – by having reliable supply chains, customers can be assured that their products arrive on time and what’s important about this is when there are delays or mistakes with orders, customer satisfaction levels decrease because customers don’t know what caused the problem so then they’ll start looking for other companies as an option.
Improved Customer Service Levels – this ties back into decreased revenue where less satisfied customers means lower customer service levels but also just simply not having what the customer needs can also lead to less customer satisfaction.
Reduced Risk – suppliers are much more reliable than other sources of materials which means that you’ll have a lower risk of producing sub-par products because everything is what it should be and there’s no guessing involved with what type of fabric, for example.