Also referred to as supplier management software, vendor management software, supplier management program or supplier management tool. A supplier management system is a set of tools, processes, and practices organisations use to effectively manage their relationships with suppliers. The primary goal of a supplier management system is to optimise the value and performance of the suppliers in a company's supply chain, ensuring that they contribute positively to the organisation's objectives.
Key components and functions of a good supplier management system include:
Supplier Onboarding: Streamlining the process of integrating new suppliers into the organisation's supply chain, ensuring they understand the company's expectations, standards, and procedures.
Contract and Agreement Management: Creating and managing contracts, agreements, and terms of engagement with suppliers, including pricing, delivery schedules, quality standards, and other relevant terms.
Performance Monitoring and Measurement: Continuously evaluating supplier performance against agreed-upon key performance indicators (KPIs) to assess compliance, quality, delivery timeliness, and other relevant metrics.
Risk Assessment and Mitigation: Identifying and assessing risks associated with each supplier and implementing strategies to mitigate these risks, ensuring business continuity and minimising potential disruptions.
Collaboration and Communication: Facilitating effective communication and collaboration between the organisation and its suppliers to enhance efficiency, transparency, and alignment of goals.
Supplier Development and Improvement: Supporting and encouraging suppliers to enhance their capabilities, processes, and performance through training, feedback, and performance improvement initiatives.
Supplier Segmentation: Categorising suppliers based on their strategic importance, criticality, and potential impact on the organisation, which helps in tailoring strategies and efforts accordingly.
Data and Information Management: Centralising and managing supplier-related data, documentation, and information to ensure easy access, accuracy, and security.
Compliance and Regulatory Management: Ensuring suppliers adhere to applicable laws, regulations, industry standards, and ethical practices.