Supplier Management: Evidence To The Shift In Priorities Of Contemporary Organizations

By Author: flexjohn
Total Articles: 93
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Effective supplier management is an important part of procurement profession. Various categories of supplier need different intensity of effort and approaches with strategic and critical suppliers demanding maximum attention. However, the first step for implementation of the right approach is recognition of a strategic or critical supplier. In Supplier Management , it is important for you to get value from major suppliers by agreeing to a purpose for the relationship. In addition, it is equally important to translate this into targets, objectives, specific actions and measures that deliver their purpose.

The programs of Supplier management are designed for creating closer working partnerships with your suppliers. This also leads to better value creation, both for organization as well as the supplier. However, there are diverse views if the benefits would exceed the potential risks.

There are several benefits of Supplier management programs. Firstly, such programs help in identifying the sources of waste and enable its elimination, ...
... create lower costs and facilitate improved services. Naturally, waste could be created on account of inefficiencies in systems, processes and working styles. Moreover, these programs also help in building mutual dependency. If both the sides give value to the benefits of a relationship created through supplier management program, they also expect the relationship to last for a long time. Therefore, during times of shortage, your organization remains unaffected by the need for supplier to allocate their outputs.

Apart from this, important suppliers are likely to make investments that improve their capability and capacity to meet your requirements. Last but not the least, Supplier Management programs also create shared responsibility. This result in motivated suppliers who go can go to any extent to for helping you.

Conventionally, the management of suppliers was considered to be a zero sum game. Majority of companies focused on short-term goals with price being the most important factor. However, the increase in volatility of commodities and outsourcing has helped in moving supplier management to the forefront of organizational strategies. More and more companies are devoting their time and resources for determining the best practices that manage supplier relationships.

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