Those organisations that can distinguish themselves [as good at supplier management] will be able to leverage strategic supplier management to lower supplier costs, improve supplier relationships and that ultimately translates benefits into competitive advantage. So says Aberdeen Group in their research report ‘The Year of the Supplier – Perspectives on Supplier Management in 2011’.

Aberdeen Group surveyed 151 enterprises using supplier management in a diverse set of industries. The report goes on to warn that the adoption of tools and strategies to increase on-time delivery and project completion are necessary to reduce the risk of ‘catastrophic’ project failure. Effective supplier management must include a more strategic focus that also considers the impact suppliers make on an organisation through the adoption of tools that can measure areas such as supplier risk, compliance and performance. “Business demands today are requiring organisations to place more emphasis on improving supplier relationships, sparking increased interest for promoting areas such a supplier information management, compliance, risk and performance,” says Constantine Limberakis, senior research analyst. Aberdeen Group.

Limberakis further suggests that ‘The fact that the use of suppliers in an organisation typically follows the Pareto principle emphasises the need to have additional supplier insights, answers to supplier based challenges, the ability to seek alternative sources of supply, and the capability to predict failures.’

Interestingly, the research highlights one of the ongoing challenges still facing organisations today is the use of disparate systems for tracking supplier information and that supplier information is often prevented from providing a holistic picture of suppliers due to a lack of a unified supplier management process.

Aberdeen Group noted that ‘The essential process element advantages for the best in class appear to be the ability to monitor, track and collaborate with suppliers for the purposes of understanding suppliers outside of the typical buyer-supplier relationship. Making decisions on suppliers is based on the intrinsic ability to analyse historical supplier data, yet also have the ability to continue to leverage supplier information as the suppliers evolve.’

Here are Aberdeen Group’s required actions to achieve best-in-class performance

• Enhance the process of acquiring and leveraging supplier information
• Diminish and deter supply/value chain disruption through supplier visibility tools
• Improve supplier benchmarking and/or performance through monitoring tools
• Improve supplier onboarding and enablement
• Improve the process of acquiring and leveraging supplier information
• Improve the ability to analyse the supplier base
• Improve collaboration with suppliers
• Improve supplier risk capabilities
• Implement supplier benchmarking and performance monitoring tools