Learning Objectives
To understand:
 the importance of supplier management and development
 how supplier performance can be measured and evaluated
 how different supplier performance evaluation tools can be applied
 the importance of supply base optimisation
 the supplier development process
 purchasing performance evaluation and benchmarking
 the mechanics of supplier relationship management.
10.1 Introduction

This Topic focuses on various aspects of supplier management. These issues are described in
Chapters 8-9 and 19 of MHGP (performance measurement) and are highlighted in Figure
10.1 in the broader context of the procurement process. The textbook material is
complemented by a section on supplier relationship management. You may also look up
L&F, ch.7 and Baily et al (2008) ch 5.
Procurement process
Procurement strategy: make or buy
Source selection strategy: how many suppliers
Requirements specification for deliverables
End product
Figure 10.1 Supplier management in the broader context of the procurement process

As noted in earlier Topics, the typical procurement transaction comprises three elements:
the deal, the contract and the relationship between the parties. To procure goods and services,
the procurement department has to arrange deals, negotiate and sign contracts and forge
relationships with suppliers. This Topic focuses on the management of supply base, i.e., the
selection of suitable providers of goods and services, evaluation of their performance and the
pursuit of long-term, synergistic relationships with selected suppliers that allow all parties to
meet their business objectives and grow. The Topic also comments on the broader aspects of
supply chain performance management and evaluation. Its final section addresses supplier
relationship management………………………………………


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