Tuesday 15 April 2014

Supplier Can Provide Real Value To Your Organization

Authored by Usama Shahid

In many organizations procurement department start training their suppliers to improve their efficiency and performance. So they can get the better results from their strategic vendors in the shape of timely deliveries best quality by eliminating other risks. 

Last weekend, we had a wonderful gathering with the bunch of folks from Sourcing and logistics Departments of some nonprofit organizations. They randomly started discussing about the importance of well-groomed supplier in their daily supply chain cycle and I am very much agree with their prospects that “Supplier should be consider as a central point of procurement”. 

Supplier is a central point point of procurement activities and processes. But, it is surprising how few organizations really think like that. Yet the performance of a supplier has a huge impact on an organization’s success and will ultimately determine how the procurement function and its leadership will be regarded by the business. 

Vendor who provides an excellent product and service can provide real value to your organization – regardless of the quality of the sourcing process or contract, but a brilliant category management process and best practice contract will amount to nothing if the supplier simply fails to perform. 

That’s why choosing the best supplier and then managing them in a joined-up, integrated and consistent manner throughout their life as a supplier should be at the very heart of everything procurement professionals do and care about. It can only be happen when you start giving them confidence train them according to your criteria’s making them feel that they are the important part of your organization. Although we often see Procurement executives complain that their own organization do not fully appreciate the importance of suppliers and their contribution to business success, yet it is clear that those same executives do not reflect this importance in the way they and their procurement functions think, organize and work. 

We can use these few tactics for managing supplier relationships for a long term benefits: 

Supplier Performance Evaluation: Maintain suppliers data base according to their category restrictions, customized questioners, Lets evaluate the end user that how supplier is performing and you may hear "Great!" But what if you think the supplier is performing poorly? Who is right? You can't tell without agreed upon performance standards than review it from your Vendor Relationship Management by evaluations the score cards looking at the KPIs which vendor have met there scorecard of your strategic suppliers, agree upon what to measure (e.g., percentage of orders delivered by their due date) and what the goal is (e.g., 95% on-time deliveries).

Idea Sourcing & Value Creation: Better profitability can come from ideas. You can greatly increase the number of good ideas by sourcing ideas from your suppliers rather than just from your company's employees. Some leading organizations discuss their conceots /ideas with their suppliers to get the maximum local market knowledge. 

Supplier Development: It's logical that when you improve the capabilities of your company's workforce, your company benefits. It’s vice versa when you have trained your suppliers according to your KPIs your supply chain department performance increases. Leading companies engage in supplier development - providing resources to improve their suppliers' capabilities. Often this but really can be any collaboration that makes suppliers more capable of delivering benefit to your company.

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