Why is supplier management important?
Without an effective supplier management system, your organisation can find that the services delivered by suppliers fail to meet expectations and the planned business outcomes. The challenge many organisations have is managing these areas efficiently.
Supplier management is all about putting in place a system to control the third-party vendors that supply your business with goods and materials. As a business owner, managing suppliers effectively can eliminate waste during production, warehousing and in logistics.
Having a solid supplier relationship ensures a strong and ethical supply chain and is key to maintaining a successful business.
Think about it this way: your business needs goods to sell, and to get those goods, you need a supplier. To make sure that you keep receiving those goods, having a good supplier management system with your vendor is essential. A strong relationship and ethical processes ensures on-time delivery on their end and on-time payment on your end.
What contributes to good supplier management governance?
Any organisation can develop good supplier governance practices. The key is to understand the foundations of good supplier management and how these will apply to your company.
The following areas should be considered:
1. Quotes and Supplier Selection
2. Supplier onboarding
3. Managing supplier risk and compliance
4. Supplier policies, procedures and guidelines
5. Contract management and supplier performance
6. Supplier Relationship Management
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