I have been asking myself this question for the past three years as I have been researching Supplier Management with companies. The term is very broad and used differently depending on who I am talking to. Therefore I thought I should define how I have defined Supplier Management based on all the interactions I have had with customers on this topic. To give Supplier Management a definition and space you must define the business problems you are trying to solve, but I will save those for a different post as I think everyone has their own set of problems depending on what type of company you are and who you are in the organization.
When I say, "Supplier Management", I am really thinking about the following elements: Information Enrichment; Information Management; Supplier Diversity, Sustainability, and Corporate Social Responsibility; Supply Risk Management; Performance Management; Unified Reporting and Analytics; a Unified Connected Network; and interoperability with existing infrastructures.
Information Management– Companies need a process around collecting up to date supplier information, incorporating the supplier into a company’s supply chain to ensure vendor profile information in ERP systems are not dirty, incomplete or duplicated.
Information Enrichment – Incorporate 3rd party data sources to enrich and validate supplier information. This saves time from having to manually check the data and relying on inaccurate information.
Supplier Diversity, Sustainability, and Corporate Social Responsibility- All companies need to know the certifications, classifications, and accreditations of their suppliers along “Diversity” requirements and whether they have lost their accreditation. This will ensure suppliers are meeting their agreements and don't negatively impact your business.
Supply Risk Management- A single point of control to help govern and measure risk such as, but not limited to, financial solvency, quality processes and measurement, business management, insurance, social and environmental responsibilities.
Performance Management – Establish a consistent program and process for measuring suppliers to avoid critical supply problems via tight collaboration and frequent measurement
Unified Reporting and Analytics – Whether your company is trending performance or risk, creating a comprehensive 360 degree supplier report, or wanting to know who your strategic suppliers are for a given category, your company must have a unified reporting solution with all data residing in a single system. This eliminates the need to replicate data into multiple systems or spend countless hours gathering data in an excel sheet.
Unified Connected Network– Provide a way for suppliers and buyers/companies to maintain information about the supplier which can be global across all companies (such as a contact e-mail address) or specific to a company (such as approval to do business in a specific category). A network makes it easier for suppliers to update their information and for you to keep your information up-to-date.
Interoperability – A Supplier Management solution must connect to multiple enterprise systems including necessary systems such as ERP and Spend Management. For example, one must be able to show all contracts with a green supplier or provide a single supplier search for end users to find suppliers. These solutions eliminate re-entry of data, data mistakes, and user adoption problems.
My short descriptions don't give each area enough justice, but hopefully gives you a better idea as to how I am thinking about the solution area and space. Do you define Supplier Management this way? Why not?