Supplier Lifecycle Management

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Supplier Lifecycle Management (SLM) is a process that helps you manage your supplier relationships and ensure they are aligned with your business strategy while also helping to reduce costs by reducing the number of suppliers required for each product or service.

SLM is the overarching strategy that enables companies to identify and leverage the value they can gain from their supply chain partners.

KEY Takeaways

  • SLM is a best practice approach to managing suppliers in order to mitigate risk, reduce costs, ensure compliance, and create sustainable supplier relationships.
  • There are four stages in the SLM lifecycle: supplier selection, performance monitoring, supplier classification, and partnerships/alliances.
  • SLM is an end-to end approach to managing suppliers.

It is a best practice approach for selection, monitoring, classification and creation of a long-term partnership to:

  • Mitigating risk
  • Reduce costs
  • Ensure compliance
  • Sustainable supplier relationship

It is an end-to-end approach to managing suppliers in a transparent and structured way.

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  • Four Stages in the Supplier Lifecycle:


    1. Supplier Selection:

    A successful supplier selection process leads to better outcomes. It helps you identify potential risks and opportunities, understand the market dynamics, and make smart decisions based on facts. A well-executed supplier selection process ensures that the selected supplier delivers what you want while minimizing risk and cost.

    This includes identifying potential suppliers, evaluating them against your requirements, and selecting the right partner for your needs.

    2. Performance Monitoring

    Performance management is about understanding your suppliers' performance and measuring this performance over time. This allows you to track progress towards agreed KPIs (Key Performance Indicators) and take action as needed.

    If the supplier does not meet the expected level of performance, it's important to have a clear improvement plan. You should be able to measure the impact of any actions taken and evaluate whether the change has been effective. 

    3. Supplier Classification (non-approved, approved, preferred, certified, partnership, and disqualified)

    Classification is about determining which suppliers will be part of your supply chain and who will play a key role in delivering your products or services. Suppliers are categorized as non-approved, approved, preferred, certified, and disqualified.

    4. Partnerships & Alliances

    Partnerships and alliances allow you to access additional capabilities, resources, and expertise outside your organization. They help you achieve more than just cost savings; they provide new ways to innovate, grow, and deliver customer solutions.

    The benefits of these agreements include reduced risk, increased efficiency, improved quality, and lower costs.

    Conclusion

    Supplier Lifecycle Management is an end-to-end approach to managing suppliers efficiently and sustainably. The four stages outlined above are the core elements of SLM and are essential to its success.


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