Dec 2, 2006 1
Healthy paranoia drives investment in supply management – Part 2
In Part 1 of Healthy paranoia drives investment in supply management, I explored issues in supply management as illustrated in Global Logistics & Supply Chain Strategies Magazine (online version) – an article in their recent edition is on Investment in Supply Management. The article was authored by Jean V. Murphy.
In the previous part, I explored what firms view as supply management and what solution providers view as Supplier Relationship Management (SRM). In this part, I will explore how firms think about supplier management and supplier networks and the steps that firms could take to structure their relationships vis a vis their suppliers as outlined in the article.
Jean outlines the steps that comprise supplier management as follows:
Core Suppliers
Jean notes that the first step is,
identifying key suppliers that are core to a company’s operations and that warrants establishment of joint processes and communications.
And,
So the first step in formalizing a supplier management program is having visibility to your suppliers and how much of your enterprise they supply.
What I find surprising is that when it comes to supplier management, firms are sometimes clueless about where and how they spend their dollars. This point would not have arisen if firms had a firm idea of the power of their suppliers (harkening to the Five forces model from Michael Porter).