Electronic Signature Software

Best Practices in Supplier Management

Supplier relationship management is one of the most important mandates of the procurement function of any organization, part of which is implementing best practices in supplier management. In this post, we’ll see some of these.

Suppler performance management: This is an important activity that is unfortunately not followed by too many firms around the world today. Most of them will have some kind of performance appraisal program when it comes to their employees but neglect to do the same for their suppliers.

However, in the integrated world we live in today, any issues that affect the supplier also affect the firm. After all, if the supplier cannot make the promised deliveries, it is the firm’s business that suffers. To avoid such scenarios, the firm should implement a performance measurement program for their suppliers too. They should come up with a set of parameters on which to judge their suppliers and conduct appraisals periodically.

Real-time information sharing: The world out there is volatile; nothing remains the same for long. In such a world, it would be in the firm’s best interests to enable real-time information sharing with their suppliers. From price and quantity details to any other factor that may have an adverse effect on the buyer-supplier relationship, every piece of information should be shared in real-time so as to enable instant and meaningful decision-making. Technology in the form of an online procurement system can help in this regard.

Staying flexible: Some procurement professionals seemingly rush to tie up long-term contracts with vendors, a practice that is best avoided. Agility is one of the most desirable qualities in procurement and supply chain management, and any firm that can’t be flexible will have to face the adverse consequences. Consider the future needs of the business before signing long-term business contracts. A product that you manufacture now may be retired from the product line a year down the line. Be careful not to get caught in rigid contracts and always stay flexible.

Have a happy weekend!