Influencing the Shift in Supplier Relationship Management: The Role of Administrators

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So far in this blog series we’ve discussed how we as procurement professionals need to change our view of supplier relationship management in order to shift to more of a partnership, rather than an adversary relationship, and we have highlighted some of the steps CPOs can take to influence this change. Now that your CPO has laid out a plan, what actions can you, as an administrator, take to help support this important shift in supplier relationship status?

Supplier Management Protocols and Standard Operating Procedures

Many times leaders don’t see or understand the value of building a strategic supplier relationship. In order to aid leaders, it is helpful for administrators to establish a protocol and some standard operating procedures to support associates in conducting a business review. A few deliverables that administrators can set up include a Word document outlining the review process, an Excel document with examples of data analysis and chart/graph creation and a PowerPoint document with an example of what a finished business review slide looks likes. Once these initial documents are created, administrators should take the process through the next step, sending them to each commodity team lead who should in turn choose a supplier they would like to set up a business review with.

A Strong Methodology to Measure Supplier Impact

Once suppliers are chosen for a business review, one of the biggest steps an administrator can take is to develop a methodology to qualify strategic supplier partners. As Mark Conley, Executive Director of Procurement Services with the University of Washington states in the recent NAEP 2016 Innovators Forum Report: “We have given a lot of thought to the criteria for being a strategic supplier. The methodology we developed forced us to identify suppliers with the most potential to impact or goals and objectives.”

Featured in the NAEP report, the following is an example of a methodology used by the University of Washington to identify strategic supplier relationships:

GoalsMethodologyParameters
  • Reduce Costs
  • Improve quality and service for customers
  • Improve process efficiency
  • Stimulate continuous improvements
  • Reduce risks to the University
  • Support University initiatives
  • Standardize contract management process
  • Foster synergies for benefit
  • Create and standard method of analyzing spend to identify our most important suppliers and contracts
  • Identify the parameters that are important elements of a strategic supplier relationship
  • Assign points relative to the importance of each parameter
  • Create Spend (dollars): 100 – 300pts
  • Number of transactions (purchase orders): 50- 150 pts.
  • Number of user departments: 50 – 150 pts.
  • Amount of revenue: 0 – 150 pts.
  • Risk/criticality: 50 -150 pts.
  • Ability to influence supplier: 0 – 300 pts

Providing the initial tools, pushing leaders to start a business review and developing a methodology to identify potential strategic supplier relationships are some of the biggest steps administrators can take towards building these new relationships. Stay tuned for the next blog where we take a look at the other side, highlighting the role of suppliers.

Stephanie McDonald is a product marketing manager at JAGGAER covering supplier management and sourcing solutions.

Stay tuned for the next blog in this series that will highlight how the role of the suppliers play in strategic supplier relationship management.  Do you need a solution to help manage your supplier relationships? Please watch this short demo on Total Supplier Manager!

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