Suppliersalways have their fingers dipped into market changes and innovations, which arereal assets in today’s demanding business setting. Earned value is a very effective metric for monitoring time & material contracts (effort vs. progress). Ultimately a supplier management process is one way that organizations can limit their exposure to the risks that are often associated with suppliers. In the same manner the supplier management approach is aligned with the type of product and services purchased, the project management approach must be adjusted appropriately. In the same manner the supplier management approach is aligned with the type of product and services purchased, the project management … By managing the relationships with the various suppliers it helps to monitor their performance. Commodity: They are for suppliers who provide low-value or easily available products or services. Nothing is better for growing your profits than getting a … Supplier Agent: The supplier agent is responsible for an activity or a task within the activity of the supplier. Every organization purchases some quantity of goods and services from external suppliers. The following challenges are faced by supplier management: The needs of the business and IT industry are constantly changing. The needs of the business are identified by, Generating a Statement of Requirement (SOR) or Invitation To Tender (ITT). Project Management Approach. Provide timely and formal written communication throughout projects and disseminates all critical information Price is what you pay, value is what you get. Supplier resources are managed in the same manner as other resources on the team. In addition, the project management team may be required to take advice from the organization's legal representatives. The suppliers are given the following classifications based on the roles they play: Strategic: They are for major ‘partnering’ relationships which involve senior managers sharing strategic information which is confidential in order to facilitate long-term plans. It is thus important that the organization engages properly with its suppliers, establishes a proper relationship, manages the requirements and communicates properly about them to the suppliers. The process activities of supplier management involve the following steps: To define the new supplier and the requirements of the contract. Make sure that supplier work and deliverables are clearly identified in the project plans (project management plan, schedule, and project budget). An alternative to creating separate sections in the WBS for the supplier is to identify the vendor deliverables/activities with a separate activity code in the project schedule (preferably using a field that can be filtered to provide a view of supplier deliverables/activities). Product validation deliverables are built into the project schedule. Skills in organization, risk management, and projections are … The project team validates that the product works as advertised (based upon commitments during the purchase cycle). The management of all the suppliers and contracts which are needed to support the IT services are included in supplier management. Contract administration is the management of the contract with the vendor. Supplier Management refers to all the business processes and activities that deal with the entire lifecycle of a supplier for an organization. To establish and maintain a policy regarding suppliers and also to maintain a supporting Supplier Contract Management Information System. Steve recently transferred to the North Carolina Chapter of PMI from the Dayton Ohio PMI Chapter, where he was active as the editor of the chapter newsletter, and PMP certification instructor. All rights reserved, DevOps Foundation® is registerd mark of the DevOps institute, COBIT® is a trademark of ISACA® registered in the United States and other countries, CSM, A-CSM, CSPO, A-CSPO, and CAL are registered trademarks of Scrum Alliance, Invensis Learning is an Accredited Training Provider of EXIN for all their certification courses and exams. This is done by, Managing and controlling the operation and delivery of the service or product, Monitoring and reporting the service quality and the costs incurred, Managing the relationship with the supplier. Supplier personnel or organizational culture which is not aligned with the requirements of the business. Selecting the most favorable alternative. Ensure that the amount billed is consistent with the contract/purchase order. The following are the key elements of the supplier management approach for a make to order purchase with a fixed price contract: Make to Order – Time & Material – The supplier is delivering a product/solution that will be customized to meet the needs of the project, and the purchase price will be based upon the actual time and materials required to deliver the custom solution.