Business needs have changed a lot over the last few years, resulting in shorter product lifecycles and wider market swings. As a result, supplier collaboration has emerged as one of the top strategies to elevate the performance of businesses to the next level. Suppliers of today possess detailed insights into market changes and have their fingers on the pulse of innovation, which will prove beneficial in today’s hyperkinetic business environment. But to gain value from suppliers, businesses need to understand how to better manage suppliers. Below, you will find the supplier management best practices for 2019 and beyond.
Supplier management best practices #1: Segment suppliers effectively
Businesses usually segment their suppliers based on their impact on the supply chain and supply market complexity. They classify suppliers into strategic, bottleneck, leverage and routine suppliers which many a time may lead to poor return on investments (ROI). By incorporating a third parameter that can help measure the compatibility between the organization and the supplier, companies can better manage their suppliers and achieve set objectives. Also, this will help them to improve supplier relationship management, develop supplier-specific strategies, and improve collaborations with them.
Supplier management best practices #2: Develop a governance model
After segmenting suppliers, companies should develop a governance model that can track the relationship with suppliers from the beginning. This will provide clarity to businesses in understanding – who is in charge of managing the relationship with suppliers and when should a senior executive be involved? It requires resources from both buyer and supplier companies to ensure that the performance meets business objectives. In the case of strategic suppliers, the degree of governance will be more than transactional suppliers.
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