Businesses are experiencing an unprecedented proliferation of dynamics, competition, and complexity due to globalization. The purpose of engaging with suppliers is to maximize business performance, thus all organizations use them for providing a wide variety of goods and services. A business’ supply chain is essential, which is why managing suppliers is necessary.


Business processes and activities that manage an organization’s relationship with its suppliers are called supplier management.

This may include, but is not limited to, identifying, selecting, and managing relevant suppliers, along with a practical evaluation of their performance so that the organization can achieve the greatest value from these suppliers.

An organization’s business relationships are complex, its suppliers vary, and their importance must be taken into account. In this blog, we will cover the benefits, principles, and best practices of supplier management.


Two main pillars of supplier management ought to be recognized to establish why businesses require it:

  • Evaluation of whether the suppliers meet the requirements of the organization
  • Engagement with suppliers throughout their lifecycle to identify areas for improvement

The following factors highlight the need for supplier management – ensuring that the supplier(s) deliver the maximum value for the appropriate requirement, given the investment in the supplier(s). A supplier’s performance needs to be tracked and measured to make sure it is as effective as possible. Moreover, regular communication with the supplier helps to build a transparent relationship, which allows for the quick discovery of areas for improvement.


Having learned why organizations need supply chain management, let’s examine its benefits:

How to manage your supplier base effectively as it grows

Several factors are resulting in the growth of organizations’ supplier bases, such as increasingly globalized business processes, increases in the complexity of supply chains, and the expansion of organizations’ scale of operations. Moreover, managing the entire lifecycle of suppliers becomes more difficult as the number of suppliers engaged with the organization increases. Organizations will be able to manage their many suppliers much easier with a well-structured supplier management process.

Managing costs and improving quality

To identify ways to save money in the supply chain and to scrutinize supplier output, businesses must have strong supplier management practices. The resulting bottom line directly affects the business.

A transparent supply chain for the organization

A supplier management system will streamline data related to the lifecycle of your suppliers, allowing you to save time and money. Through this system, organizations can obtain an increased understanding of how their suppliers perform and identify areas for improvement, as well as implement strategies to keep improving further.

Considering relevant parameters when tracking compliance

Suppliers must adhere to specific set parameters to ensure they are meeting the organization’s needs. By assessing the suppliers’ compliance with the set parameters you can identify areas that can be improved to maximize value.

Performing supplier evaluations

Supplier management has this benefit as one of its main advantages. Because your organization relies heavily on its suppliers for its performance, you need to know how they are doing. In addition to assessing supplier compliance, supplier performance management also provides insights into their performance.

Management of Supplier Relationships

Your relationships with your suppliers might not seem like they are of much value, but they can be very helpful to your organization. You build long-lasting, trust-based relationships when your suppliers are involved in the process of determining how to implement the relevant requirements. By collaborating with suppliers, you make them more likely to grasp your company’s goals and work toward those goals together.

Processes for managing suppliers

Once we have identified the need and benefits of supplier management, a process for managing suppliers needs to be established.

In terms of managing suppliers, organizations will be guided by the lifecycle management process.


A booming idea called ‘Supplier Lifecycle Management’ has gained popularity – What is it, and what are its differences? Supply chain management has long been the company’s back seat as suppliers were merely recipients of its objectives and strategies. The Supplier Lifecycle Management process places suppliers at the center of the entire process, making them more dynamic and important. Finally, Suppliers play a key role in the creation of value in supply chains since they are at the center of procuring.