16. Supplier Management

[MUSIC] Welcome back to our lesson on Supplier Management. Upon completion of this lesson learner should be able to describe the role of Supplier Management and discuss the key components of Supplier Management. Supplier management is the second core process in the procurement process model, and is focused on monitoring supplier and company performance to agreed upon contractual requirements. Some elements of Supplier Management deal with proper administrative steps and communications. For example, ensuring that suppliers electronic or paper based catalogs and material specifications are updated to ensure that the latest information flows between entities.
Throughout the life a procurement relationship, supplier performance is evaluated to ensure a healthy relationship.
Dimensions that are monitored include, on time delivery performance, the percentage of defect free materials and services and adherence to agreed upon pricing, among many other dimensions that may be evaluated. In contracting with a the supplier, a company may have built in expectations for continuous improvement, and reduced pricing over time and improved performance. Hence, tracking savings that have been achieved can be an important part of supplier management. For example, I have seen third party logistics providers promise to consolidate shipments across their shipping clients to provide a partner with a reduction in transportation spend of x percent over two years. This is a savings that shippers used as part of the selection process criteria and expect the savings to come to fruition. So there is some record keeping and analysis that needs to take place to see whether the transportation spend, on an apples to apples basis, common metric, has actually taken place over the two years. End user satisfaction with the supplier needs to be considered. This may be gauged through keeping track of complaints and sending periodic surveys to the end users. In contracting with the supplier, a company often commits to purchase a given amount of a material or service over a given time period. It’s important that the procurement function monitor spend to ensure an adherence to these contractual commitments, and that leakage buying is minimized.
In this lesson, we learned that the role of Supplier Management is to Manage, Monitor, Evaluate the Supply Base performance, as well as internal organizational performance. And we discussed the key components of Supplier Management. Thank you for watching, and we’ll see you on the next lesson. [MUSIC]

Jim Rohn Sứ mệnh khởi nghiệp