Supplier management – What it is, definition and concept

Supplier management is the tool that companies have when they seek to achieve profitability and efficiency when negotiating their different supplies.

Companies develop tasks and try to design tools to correctly manage their suppliers in order to ensure the best possible reception of the goods and services they require.

That is, for all types of organization it is necessary to design a management related to its different suppliers. In this way, it will be able to fulfill its commitments derived from the economic activity it carries out.

Therefore, the hiring or relationship with a certain supplier will affect the interests of a company. And more formally at their efficiency levels.

On the other hand, supplier management assures companies the maintenance of their stocks and a supply adapted to their needs. Both at the level of physical supply and economic control thereof.

Main characteristics of supplier management

The work of supplier management has a series of characteristic features:

  • Multitasking quality: This work includes fields such as accounting, the supervision of quality ratios and the possibility of accessing new products.
  • Essential work: The design of any commercial strategy should be based on the efficient outlining of a defined supplier portfolio.
  • Duration: Usually companies deal with suppliers for long periods of time due to contracts for the provision of services or purchase of goods.

Phases of supplier management

The management of the relationship with suppliers involves a list of stages to take into account:

  • Choice of provider: This must satisfy the need previously assessed by the buyer in this case (price, availability, geographic location, access to discounts …). Profitability and efficiency are sought.
  • Purchasing strategy: There is often an interest in maintaining a diverse supplier portfolio or choosing a single supplier with exclusivity.
  • Economic study: Each designated supplier must be accessible, given the efficiency ratios of the contracting company.
  • Maintenance of commercial relationship: The exchange of goods and services will be sporadic or periodic. In both cases, it must be regulated by means of an adapted contract that specifies the economic conditions of both parties.
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