Supplier Strategy

12 May, 2023

The Strategy Blueprint

Construct a world-class procurement strategy.

The Strategy Blueprint is a series, guiding you through the steps to developing a strong, holistic procurement strategy.  Weekly publications will dive into one of the 15 modules supporting Sourcing Champion’s procurement strategy and provide insights from our procurement experts.

SP.03.Supplier Strategy

Developing Relationships for Success

In today’s business environment, having a well-defined supplier strategy for effective procurement is critical, especially with increasingly complex and interdependent supply chains. At the heart of this strategy lies the identification of key suppliers and establishing strong relationships with them to maximize their value contribution to the organization. A systematic method that evaluates current suppliers (N09), then identifies, prequalifies, and releases new suppliers (N10), and subsequently classifies suppliers and formulates targets & strategies (N11) makes all the difference.

Supplier Strategy

To evaluate suppliers (N09), it is crucial to have a comprehensive understanding of their performance, capabilities, and risk profile. Supplier 360° view capabilities empower procurement teams to collect data on important aspects like spend, financial performance, product quality, delivery times, and compliance with regulations.

Identifying and releasing new suppliers (N10) is a decisive exercise to reduce the risks o This requires strong cross-functional cooperation within companies.

Classifying suppliers (N11) is a crucial step in prioritizing the attention of the organization differently per class. Supplier classification uses terms like preferred supplier, strategic supplier, innovation partner, platinum partner, and gold partner. The SRM model (supplier relationship management) is designed to encourage collaboration and innovation with the most important suppliers that impact the company’s top line and bottom line. Supplier-enabled innovation processes are established to capture the supply base’s innovation power.

The next important step is creating the right supplier strategies with the right targets (N11). The supplier strategies must be linked to the category and framework strategies and their value contribution targets. Our digital partner Cirtuo provides a solution to develop your supplier strategies in alignment with your category strategies.

By following these steps, procurement teams can establish successful relationships with suppliers and achieve positive outcomes for the organization.

In conclusion, a successful supplier strategy is essential for effective procurement. The combination of a structured approach to supplier management and digital solutions can help organizations maximize their value contribution from supplier relationships and achieve long-term success.

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Stay tuned for the next issue, we’ll be exploring the fourth strategic partition of our 15M architecture.