Talking about Supplier Management

The supplier management is also referred as SRM(supplier relationship management). It is critical and complex role in the procurement organization. It is attached every single procurement end to end process. Why it is a challenging for the most organization?

· Risk- The 3rd party risk is one of main streams within ERM (Enterprise Risk Management) · Multiple dimensioning- It is true the supplier management process is not a flag process flows · Complex engagement- The supplier manager has to maintain multiple internal stakeholders relationships and external supplier relationships · Heavy investment with minimum return – It is true that the organization does not see any tangible benefit by going through the supplier management transformation

Why it is important? Because it is basic and necessary. You cannot avoid having suppliers during your procurement activities or business relationship. Everything you achieve is also based on how well your supplier management is.

Despite of process which really depends on individual companies and industries, I classified the supplier management into 5 function areas

• 3rd party risk management

This is one of the most important functions in the supplier management process. You may accept the poor performance suppliers but you certainly do not want any risky suppliers on your list. It is common that the 3rd party risk management reports to ERM team since the supplier risk is a important pillar of the ERM. The 3rd party risk management team open plays the role in 1st and 2nd line of defense.

• Supplier lifecycle management

The lifecycle includes the supplier onboarding, incumber supplier maintenance and supplier off boarding. Supplier onboarding has to divide to two sections which are supplier qualification and supplier onboarding. The supplier qualification process is often used on sourcing with the potential suppliers. This process not only can eliminates unqualified suppliers before you initiating the RFx and but also can reduce your onboarding processing time. When we have the suppliers in our database, the team needs to maintain these records up to date which has the most roadblocks due the size of the incumbent suppliers, internal resource and tool. Most of companies push the supplier to manage the documentation with self-served model via the procurement tools.

• Supplier performance management

This is one of the most invested functions in the supplier management process. The most vendor managers spend the most time on this function. Typically, the main duty is to ensure the supplier deliver the SLAs which agreed in the contract. It drives the contract compliance and generates the most benefits. It is very tactic during this process due the natural of work. The vendor manager is always at fire flighting mode. There is no way or tool can guarantee the supplier will deliver 100% what the committed to. We are not able to reduce effort when the issue happens. But we can definitely select the right supplier with achievable SLAs in the contracts.

• Supplier development

This function mixes the tactical and strategic tasks. As we have our suppliers, we want to the suppliers to grow with us and become our partners. We also want our supplier base to be more social responsive and diversified. This function has 3 major focus:

1. Know you suppliers

2. Find your targeted supplier

3. Help your targeted supplier to become key partners

• Supplier Management Strategy

The strategy helps you put all dots together and drive where you want to go. The supplier strategy has to focus on promoting the preferred supplier, avoiding the potential risk suppliers and drive the efficient by the technologies.