Supplier Collaboration, Development, More - NLPA

 
 
 

Supplier Collaboration, Development, More

PurchTips edition #291

 

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Do You Know These Supplier-Related Definitions?

As a procurement professional in the modern world, you should be constantly examining your supply base for improvements. These improvements can range from working closely with your suppliers for mutual profit boosting to simply redirecting business from one supplier to another.

There are four different general approaches to managing the supply base. I'll define those for you in this edition of PurchTips:

Supplier Collaboration. Supplier collaboration means working with decision-makers at a supplier to determine improvements that can be made that will have a measurable, positive financial impact for both organizations. An example of supplier collaboration would be jointly redesigning a product that a supplier custom manufactures for your organization.

Supplier Development. Supplier development means devoting some of your organization's resources to a project that develops a supplier's capabilities or expertise beyond current levels. An example of supplier development would be "loaning" a supplier one of your organization's engineers to help the supplier implement Lean Manufacturing techniques.

Supplier Management. Supplier management means collecting metrics about a supplier's performance for your organization, sharing those metrics with the supplier, and discussing and implementing ways that the supplier can improve its performance as measured by those metrics.

Supplier Rationalization. Supplier rationalization means reducing the number of suppliers by consolidating purchases with fewer suppliers. An example of supplier rationalization would be purchasing janitorial supplies from your office supply vendor rather than a separate janitorial supply vendor.

Now, you will not need to use each of these approaches with each of your suppliers. In the next edition of PurchTips, I will teach you how to develop a supplier stratification model that will guide you in deciding which approach to employ with each supplier.

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