Isn’t supplier management all about managing your suppliers? Well, at first glance, it appears as simple as that. In fact, it is the easiest way to understand the term. Yes, from a semantic and literal point of view, this may be what supplier management really is. But it is in making the idea of supplier management work that businesses have quite a task on their hands.
Among the many aspects of what everybody ought to know about supplier management is that with the advent and ever-growing reliance of businesses on international trade, the discipline of supplier management has gained new traction. Supplier management has been a part of business for ages if one takes into account its undefined or raw use. However, technology and globalization have given it a new impetus, the way these forces have to many other such activities and areas of business.
Supplier management is a process facilitator of the highest order
In certain areas like technology and supply chain, supplier management becomes a crucial aspect. This is because of the emergence of a concept collateral to the developments just discussed: outsourcing. The mention of this word may evoke many negative connotations in many people, but the fact is, it is here to stay. It is a natural outcome of globalization and technology and is hence a force to be reckoned with, no matter what reservations some people may have about it.
It is natural for global companies in many areas from IT to textiles and from construction to food to rely on suppliers. The reason is as simple and commonsensical as one can imagine: cost effectives and ease of operation. At the heart of supplier management is the idea that many activities of a business, sometimes even core business activities or processes, are outsourced to suppliers and this is something that needs to be managed with diligence and meticulousness.
Adherence to the specifications is crucial
Another among what everybody ought to know about supplier management is that there is a core reason for which supplier management becomes critical: suppliers have to adhere to the specifications set out for a product. The specifications apart, in some high specialty areas such as medical devices and life sciences, there is a lot of importance attached to the process as well. Processes for manufacture or finishing are set out in acute detail by the regulatory agencies. If these are not complied with or if there are deviations beyond the permitted levels or extent, there could be serious repercussions on the business.
It is to prevent such situations that supplier management has to be very robust. It should consist of clarity in the process and method of allowing work. It should also have inbuilt safeguards and guarantees for errors or deviations. All the activities of the supplier, from procurement of the raw material to the transportation and final destination of the product need to be tracked at various stages. It is in ensuring that this happens in a smooth and hassle-free manner that a system called supplier management solution exists.
What to look for in a supplier management system
Now, supplier management systems or solutions are software tools that help to monitor and track the various aspects of suppliers for any activity from the first to the last stages. These systems eliminate to need to manually track the range of activities that the supplier is entrusted.
A lot of care and diligence is needed in selecting the supplier management system. It has to consist of the features that will enable the smooth flow of goods and products according to specification.
Plus, it must be compliant with the regulations. Most important of all, it should integrate rightly. Integration is the very soul of a supplier management system. The system should be able to access inputs from the right sources and integrate them into the whole system to enable smooth functioning.
Trust and relationships are the base of a supplier management system
While a supplier management system is central to supplier management, it is only the physical aspect of supplier management. It is like an edifice which is built on a foundation, and that foundation has to be the right relationship between the supplier and the company.
All the benefits of the many technologies and the power of contracts notwithstanding; what everybody ought to know about supplier management is that trust is the point from which supplier management operates. Having a sound relationship is still the core of a supplier management system, no matter how much processes may depend on technology in this age.