Supplier Lifecycle Management – just what is it?

We launched our new research paper last week - Supplier Lifecycle Management: Reduce Risk, Improve Performance and drive Supplier Value”. In it, we look at the concept of Supplier Lifecycle Management, which works from the premise that the supplier should be considered as central to procurement activities and processes.

Now traditionally, we tend to look at procurement as being made up of two cycles- the Strategic Sourcing process (from research, through supplier selection to contracting and contract management) and the transactional or P2P process. They have various touch points with each other but can be considered fairly separately.

But our hypothesis in the new paper is that the two cycle approach misses a common and critical factor that runs through the entire procurement task – the supplier. Suppliers are seen almost as a passive recipient of actions, rather than a dynamic, central party to the whole process. That’s not very logical when choosing the best suppliers and managing their performance to obtain value and minimise risk forms the absolute bedrock of procurement success.

So we’re suggesting that a third process should be considered – the supplier cycle. and as we say in the Paper, this is “designed to manage the supplier throughout the entire lifecycle of the relationship should be high on the priority list for senior procurement executives. Clearly, the supplier lifecycle links with the other two cycles and is in fact, the common thread that binds the procure to pay and strategic sourcing processes together”.

And here is our definition of what we mean by Supplier Lifecycle Management.

We describe it as “an end-to-end, cradle to grave approach to managing suppliers in a transparent, structured and integrated manner”.

Perhaps more important is the purpose of SLM, which is: to recognise suppliers as a prime source of value to the organisation and deliver that value by putting them at the heart of procurement strategy and management.

It is different from Supplier Relationship Management, which focuses principally on post-contract strategic management of key suppliers; and from Supplier Information Management, which forms an important subset of SLM. And finally for today, here are the set of activities that form SLM, relating to “cradle to grave” supplier management:

  • initial identification and engagement
  • classification and qualification
  • risk assessment and management (throughout the lifecycle, - not just a one-off event)
  • sourcing and evaluation
  • on-boarding and contract implementation
  • contract and performance management
  • supplier development and relationship management (SRM)
  • spend analysis and reporting, and
  • rationalisation

And in our next instalment, we’ll look at the benefits that can derive from SLM. But in the meantime, do download the Paper here- free on registration.

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