Aspects Of Supplier Management

iii. Value Management

Achieving operational integration with suppliers creates the opportunity for the value management. Value management is more intense than supplier integration strategy. Value engineering, complexity reduction and supplier involvement at the early stages of new product development are few ways of procurement that can work with suppliers to reduce total costs.

Value management extends beyond procurement in the organisation and requires cooperation between numerous participants, both internal and external. Teams representing procurement, engineering, manufacturing, marketing, and logistics as well as key supplier personnel jointly seek solutions to lower total cost, improve performance, or improved accommodation of customer

Increased competition

3.1.4 Supplier Management

Suppliers are major contributors in the effective functioning of supply chain operations. They can contribute through the timely and quality deliveries of goods and services. Therefore, it is essential that a purchase manger should work with suppliers to coordinate their operations and customer needs.

i. Aspects of Supplier Management

There are various aspects of supplier management such as vendor analysis, supplier audits, supplier certification and supplier partnering.

• Vendor analysis

It is the process of evaluating the sources of supply in terms of price, quantity, reputation and service. There are numerous factors that have to be considered while selecting a vendor (or suppliers). Since the importance of various factors varies in different situations, the purchase department should decide how well the potential vendors can be expected to perform against the various factors.

• Supplier audit

Periodic audits act as means of identifying suppliers’ production capabilities, quality and delivery problems and resolutions, and suppliers’ performance on other criteria. Such audit reveals the problem areas for which the buyers can attempt to find a solution before it becomes a serious problem. Few of the factors that covered by supplier audit as management style, quality assurance, materials management, design process used, process improvement policies and procedures for corrective action and follow –

The certification process verifies that a supplier can meet or exceed the demands of a buyer. It is very important when long term relationship with the suppliers is desired. Certified suppliers are also known as world class suppliers. One of the major advantages of choosing certified suppliers is that the buyer can eliminate much or all of the inspection and testing of delivered goods as less risk is associated with them.

There are certain standard industry certifications such as ISO 9000 which show that the companies with those certifications are more reliable.

• Supplier relationships

Purchasing has the major responsibility for establishing and maintaining good supplier relationships. The relationship is based on the contract between buyers and sellers. Short term contracts involve competitive bidding where suppliers are kept at arms’ length and the relationship is minimal. In such cases businesses may be conducted through computerised interaction. Medium term contracts involve on going relationships. Long – term contracts often ends in partnerships that benefit both the parties. Maintaining a good relationship with suppliers is important to maintain a competitive edge. In modern days, suppliers are viewed as partners who can provide high quality supplies, maintain precise delivery schedules and remain flexible relative to changes in productive specifications