What is supplier management?

Companies use supplier management to systematically control supplier relationships. The main objectives are cost savings, cost avoidance or cost reductions, efficiency increases, security of supply and process optimization. The most important components of supplier management include the registration, qualification, classification, evaluation and development of suppliers.

17. January 2023 | Blog

Supplier management as a sub-process of Source-to-Pay

Through S2P, e-procurement or SRM solutions, suppliers and buyers are digitally networked. Purchasing organizations intensify and coordinate supplier relationships by centrally managing all supplier-related data.

Goals of supplier management

  • Securing supplies in the short, medium and long term
  • Avoiding delivery delays
  • Establishment of a reliable and diversified supplier base
  • Cost savings, avoidance or reduction of costs
  • Increased efficiency in the purchasing process
  • Continuous improvement of procurement processes

Processes within supplier management

Within the framework of operational supplier management, the following process steps in particular are elementary:

  • Supplier qualification
  • Supplier evaluation

The continuous evaluation of the performance of individual suppliers makes it possible to develop targeted measures for supplier promotion.

In addition to operational supplier management, strategic supplier management also plays a central role in the procurement process. Here, the focus is primarily on strategic measures for supplier selection.

  • Supplier selection and assessment
  • Maintenance of supplier relationships
  • Supplier development

Why is supplier management so important?

Geopolitical challenges and volatile markets make transparent cooperation with qualified and sustainable business partners within the supply chain indispensable. As a result, suppliers are assuming an increasingly important position within the value chain of companies, making supplier management a decisive factor for operational resilience and economic success.

In international procurement markets, there are a large number of country-specific requirements and regulations that must be met. These arise primarily from a legal perspective. The upcoming Supply Chain Act in Germany and other international standards such as Corporate Social Responsibility (CSR) or Environmental Social Governance (ESG) require companies to fulfill their due diligence obligations along the entire supply chain.

Map supplier management digitally

The basic prerequisite for successful collaboration with suppliers is up-to-date data from your suppliers. The key to practical implementation in purchasing therefore lies in a supplier management system or a source-to-pay solution. This can ensure both always up-to-date data and compliance with regulations, laws and sustainability goals.

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