Once an organization has categorized suppliers, one of the benefits that is quickly realized is an understanding of how supplier changes affect the buying organization and vice-versa. Changes are the modification, addition, or removal of something from the environment. The scope and scale of each change can be different. Change management covers everything from regular, low-risk, operational modifications all the way to significant organizational strategic shifts.
In every relationship between a supplier and a purchasing organization, the frequency of change, as well as each organization’s approach to change and change management, is critical to successful delivery of services Strategic, operational, and tactical suppliers should be regularly involved in a buying organization’s change management activities because these suppliers can introduce changes that have a dramatic impact on the buying organization’s services. These suppliers should actively engage these purchasing organizations to ensure that they have a voice in any changes.
Effective change management ensures that communication occurs and that risk is optimized. When both suppliers and purchasing organizations fail to communicate, they can cause negative impacts for one another. One way to avoid negative impact and to improve overall supplier performance is to regularly engage in shared change management activities and responsibilities.
For example, a manufacturing company that is a heavy user of a custom-developed SAP application depends heavily on several suppliers for the ongoing operation of their organization’s services. Regular and clear communication of change activities ensures that suppliers and the purchasing organization are adequately aligned, resulting in overall improved supplier performance.
Supplier management is the process that ensures that suppliers produce value for the money that purchasing organizations spend on their goods and services. ITIL gives specific best practice guidance regarding what an effective supplier management process does in an organization. With supplier management, there are numerous simple things that an organization can do to improve supplier performance. This paper discussed five of those things, which are:
- Consider how your organization appears to your suppliers
- Establish clear supplier performance targets
- Categorize suppliers
- Establish clear accountability
- Engage suppliers in change management
Organizations that do these things as part of an overall program of supplier management can ultimately expect to see improved supplier performance which, in turn, improves the quality of their owns goods and services.
Reproduced and available for download from Global Knowledge White Paper: Supplier Management: Five Simple Things Your Organization Can Do to Improve Supplier Performance