Supplier Management and Auditing
Supplier management is more than simply buying raw materials or finished goods and contracting for services. It is a systematic business process that goes further than procurement to include the coordination of pre-production logistics and inventory management.
Oversight and management are key aspects of supplier management. That includes oversight and management of suppliers and their contributions to a company’s operations. Generally, supply management personnel within a company or institution are responsible for the following:
- Supplier Assessment
- Supplier Sourcing
- Supplier On-Boarding and Contract Management
- Performance Management and Auditing
- Engineering Change Control
- Supplier Development
Supply management divisions within large corporations can be very complex, with huge budgets and hundreds of engineers. Their success is usually measured by how much money they are able to save the company. A company’s ability to execute on supply management goals can directly benefit the stock price by increasing metrics such as gross and net margins, cash flow, and cost of goods sold.
In addition, conducting systematic risk management and auditing procedures is equally important to a company’s success. For example, anticipating and mitigating the impact of an unexpected interruption in the delivery of a key component can keep a company running smoothly. But the failure to account for risk in a company’s supply chain can
While it is easy to understand how supply management directly affects the results of a large purchaser or a manufacturer, supply management is just as important to service-based firms. The internet, when paired with broad improvements to logistical networks worldwide, has helped turn supply management into a key strategic objective at most large companies, capable of saving millions and increasing efficiency company-wide.