The Do’s and Don’ts of Supplier Management

This article was featured on the Skills Portal and highlights tips to improve your purchasing decisions.

Knowing how to effectively manage your suppliers is a skill that must be developed over time, follow these time tested tips to start improving your purchasing decisions today.

According to Jan Nell, a specialist in purchasing and inventory management, there are some definite do’s and don’ts when it comes to working with suppliers. He provides some instructions to help you purchase safely and effectively.

Do’s – Key Supplier Strategies

Segment and categorise suppliers: It is a good idea to rank your suppliers in terms of their function. This will help you understand which strategy or approach to use in each case.

Implement a system: Nell advises professionals in the purchasing sector to establish a supplier performance management system using management tools such as a Balanced Scorecard.

Be socially responsible: For example; do not buy from suppliers who use child labour, who source material from dubious places where forced labour practices are in the order of the day, or who source from sources known not to be renewable.

Be environmentally conscious: Ensure your suppliers follow a cradle-to-grave approach, meaning they should at all times respect the environment, take care of their own obsolete products in a responsible manner, and manage the recycling of their own waste.

Don’ts – Supplier Pitfalls

Do not follow a short term approach when negotiating with suppliers. Always see the bigger picture and try and build sound business relations for the long run.

Do not underestimate your supplier when negotiating.

Do not fail to follow the proven steps of preparing, negotiating and closing deals. Short cuts cost money.

Do not brush over supplier contracts – read all contracts again and again.

Beware of the sales person who targets the “walk over” / “easy to convince” buyers.

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