Supplier management involves finding, qualifying, and doing business with suppliers. This includes tasks such as finding vendors, negotiating contracts, evaluating performance, and ensuring payments are made correctly. Once suppliers are selected, managing a pool of suppliers involves awarding jobs or contracts as needed, monitoring supplier performance, and ensuring that contract terms are met. This process involves a large amount of paperwork and is not limited to businesses, as individuals may also need to manage suppliers.
Sellers are people or businesses that provide goods or services to other people or businesses. Supplier management is a term used to describe the process of finding, qualifying and doing business with suppliers. Common tasks include finding vendors, negotiating contracts, obtaining quotes, evaluating performance, creating and updating vendor files, and ensuring payments are made correctly.
Once a business determines that it has a need that needs to be outsourced, supplier management begins. The company must find one or more suppliers who can provide the good or service it needs, and evaluate each supplier based on pricing, capacity, response times, quality of work, and the company’s reputation. This process often involves asking for prices, checking references, and researching the company through online resources. It may also include checking the prospective vendor’s financial stability, insurance, and certifications.
Once suppliers are selected, supplier management is a matter of managing a pool of suppliers, awarding jobs or contracts as needed, monitoring supplier performance, and ensuring that contract terms are met. In large companies, a vendor manager often has more than one vendor in the pool for each type of service product. Some suppliers may be preferred in the sense that they are the first choice when a project arises. Others might be backup vendors, who will be called if your preferred vendor can’t take on a particular project or fails to execute.
Vendor management often involves a large amount of electronic or manual paperwork. Many accounts payable systems require vendors to be set up in a database. This may require the collection of vendor contact information, certificates of insurance, and taxpayer identification numbers. If the vendor will have access to proprietary or private information, a non-disclosure or other such agreement should typically be signed and entered into the vendor’s files. Many companies require vendor files to be updated annually, so a vendor manager will need to ensure that current documents are obtained annually.
The term supplier management is generally used in the context of business operations, but from time to time individuals may need to manage suppliers. A homeowner, for example, might need to contract with a roofer or interior designer; in this situation, he will have to get offers, choose a supplier, monitor the quality of work and process payments, just like a company would. Hairdressers, insurance agents, childcare facilities, and similar personal services are also examples of salespeople an individual might work with frequently.
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