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Wednesday, March 7, 2012

Key Activities in Supplier Management

The Supplier Management process should include the following key activities:
• The development, implementation and management of a supplier policy.
• The categorization of suppliers and contracts and associated risk assessment.
• Supplier evaluation and selection.
• Contract negotiation and agreement.
• Development and maintenance of standard terms and conditions.
• Dispute management and resolution.
• Development and maintenance of a Supplier and Contract Database (SCD).

The Supplier & Contract Database

The Supplier Management process is governed by the IT service provider’s supplier policy and strategy. These determine how the organization will use external suppliers and the rules of engagement when it does so. It should define how suppliers should be selected and how relationships should be managed. In the public sector, for example, the rules for procurement from the private sector are enshrined in legislation in most countries and these rules should be incorporated into supplier policy.

In common with other SM processes, sound Supplier Management depends on the effective management of information. In Supplier Management, the key information base is the Supplier and Contract Database (SCD), which will hold information on all suppliers and contracts, and on the goods and services provided by each supplier. The SCD is best implemented as a part of the Configuration Management System (CMS), itself part of the IT provider’s Service Knowledge Management System (SKMS). The integration of the SCD with the CMS enables suppliers and contracts to be linked to services, CIs and other service elements that depend on the supplier contract, enabling better risk and impact assessment and management reporting. The information in the SCD will also be included for reference in the Service Portfolio and Service Catalogue.

The SCD is used to manage suppliers and contracts throughout the contract lifecycle, providing information to, and being updated from, the key Supplier Management activities. It holds details of suppliers, including key contacts along with contract details including renewal and termination dates.

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Next: Role of a Supplier Manager

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