This post is based, in part, on Peter Smith’s paper: Putting the Supplier at the Heart of Procurement Thinking, a free download in the Spend Matters research library.
In the above-linked paper, my colleague Peter Smith notes that different stakeholders in the business value supplier management differently. Appreciating this is one of the first steps to building a successful supplier management program. For example, in Peter’s view, board-level stakeholders are considered about such areas as “supplier contribution to strategic goals, strategic risk management, managing competition or reciprocal trading (i.e., balance of trade), driving partnerships” and related high-value areas. General business stakeholders are a level down, focused on generally wanting to create “wider value from suppliers,” which might include information and supplier management areas pertaining to “innovation and development” and “contribution to the top line.”
Finance is more compliance-centered in its approach to supplier management (and within finance, silos such as A/P, treasury, legal and other areas are concerned with different areas of supplier management). But that’s a topic for another day.
In contrast, functional areas, such as supply chain and logistics, are more centered on the following types of supplier management areas of interest: “understanding production capability and capacity, planning, inventory, and logistics capability.” Quality and operations management types want similar but yet again slightly different information such as “appropriate supplier quality data and corrective actions/improvement plans.”
On the highest level, procurement centers supplier management activities on “cost and value management, contract compliance, supplier content (e.g., catalogs), supplier networks).” In addition, as Peter suggests, they must also marshal the collection of information for all the other areas and fields that the business wants them to collect—because they have to!
Even before considering all of the interests of different stakeholders, it’s important to take a step back. Consider key general factors when thinking about building a sustainable supplier management program even prior to making any content or software investments. Therefore, consider the collective answers to the following questions the “you are here dot” when it comes to supplier management and what programs you should build:
- How effectively does an organization address supplier management, supplier compliance, and supply risk as a business issue today?
- What does the complexity, composition, size, and location of supply base look like?
- What is the scope of technology deployment at the company that touches supplier management?
- How well has the organization driven adoption with current purchasing and supply management solutions?
- How proactive has the company been with addressing supplier management to date?
- Does the organization have supplier management and/or risk-related KPIs, and are they visible to senior management?
If you’re not happy with the answers to these questions, then take a step back before embarking on your supplier management programs – and even before investing the time to define specifically how different stakeholders value the area.
Download the full paper, Putting the Supplier at the Heart of Procurement Thinking, in the Spend Matters free research library.