what is supplier management in procurement
Every organization has to navigate through several suppliers to source relevant goods and services. These have varying risks associated with them.
In procurement, the supplier management process entails identifying potential vendors and the risks associated with them, selecting vendors, tracking their performances, and establishing long-term relationships with them. Good vendor management is vital to ensure that the organization's investment in suppliers is returning optimal returns.
Effective supplier management involves:
- Researching thoroughly.
- Establishing clear communication channels.
- Granting vendors visibility into payment processes.
- Measuring performances consistently.
- Ensuring compliance.
Organizations have to continuously and closely assess and track the strengths and weaknesses of the vendors involved throughout the entire part of the supplier lifecycle as well. Enabling automation through supplier management software for the automated establishment of supply-related KPIs, using vendor portals, and utilizing digital means for ordering and tracking helps streamline the entire process. Procurement software usually comes integrated with vendor management tools.
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