All You Need to Know – Defining Supplier Management


The Importance of Supplier Management 

The success of a product and the suppliers behind it go hand in hand which means suppliers too are responsible for the success of a product either directly or indirectly. And this co- dependency among industries and suppliers demands manufacturers collaborate and manage suppliers effectively and put them in a close loop while handling the product. In this blog, we will understand what is meant by supplier management and its types. 


This arising need for supplier management makes it a part of Product Lifecycle Management (PLM) where it aids industries in securely collaborating with the suppliers, moreover, it also facilitates a watch over the purchases made by the company.

Also Read: “Four Best Practices for Implementing Efficient Supply Chain Control”

Supplier Management Definition

Supplier management sketches out all the processes and techniques that a manufacturer lays down to manage the suppliers associated with its organization. As the times are changing and businesses are going global, they are extensively depending upon suppliers for the provision of several goods and services. This turns suppliers into an integral part of the business and maintaining them becomes a must.


Significance of Supplier Relationship Management

Purchasing of goods and services plays a significant role in business to keep them running and revenue-generating, also if businesses are at a loss, the suppliers will go down too. Hence maintaining a healthy relationship between suppliers and industry is a requisite to attaining a win-win situation for both sides. 


Also Read: “5 Supply Chain Technologies impacting Supply Chain Management”

PLMs are prominently known for their integration potential with various software and platforms and the collaboration feature they provide so that several teams can work simultaneously over a single platform. This aspect of PLM ameliorates the process of supplier collaboration and ensures:


  • The suppliers are providing goods and services up to the organization’s requirements.
  • Ranking the suppliers based on the services they provide.
  • Maintain the proper flow of data and communication between these two entities.
  • Identify areas of enhancement while collaborating with suppliers throughout their lifecycle.
  • Maintains transparency and visibility in the supply chain which leads industries to increased production with minimized chances of errors.
  • Cost effectivity in production and rapid responses to unexpected scenarios.
  • Managing lifecycle risks and compliance efforts.


These are some generic advantages an industry can attain while managing the suppliers through PLM software, and there are a lot of things that can be enhanced while implementing supplier management.


Supplier Relationship Types

Supplier relationships are of two types: vertical and horizontal. Industries have to identify which relationship will be best suited to their organization to meet their goals and objectives. While vertical relationship carries out in a more traditional way comprising distributors, suppliers, and retailers, horizontal ones are formed between the organizations that work in conjunction. These suppliers work together to achieve mutually agreed-upon goals and have more risks than the vertical ones. As with every relationship, there are a variety of levels or depths of involvement.



These are purely transactional relationships and both parties act as buyer and seller with little or no collaboration during the process outside of the transaction.


Strategic Alliance

In this kind of relationship, both organizations collaborate and modify their processes to accomplish their goals collectively.



Parties work closely and customize processes to gain fruitful results. While managing the suppliers these processes also maintain the components provided by them. They keeps the track of what materials are being used in which part of the product.


Challenges of Supplier Management

 Quality Assurance

Maintaining the quality of the product is a must to do for a company, a minute compromise in quality will drain the product down. Hence identifying risks, and discrepancies and getting rid of them is crucial.


Meeting Compliances

Industries work with different types of suppliers for different parts and meeting compliances for all of them is a bit of a herculean task. That is why industries need to make sure that the suppliers remain cooperative to deliver valuable and reliable coordination between them.

Also Read: “Advance Supply Chain with Artificial Intelligence & Machine Learning”


Final Thoughts

Supplier management challenges shall be overcome by the industries to put together seamless supplier management and PLM is an effective way to do it. Supplier management is an integral part of PLM and it enables effective collaboration between suppliers and businesses.



KloudPLM is one such solution to handle the collaboration and ensures efficiency and transparency in the entire product lifecycle. Furthermore, Starting with the ideation of the product to its launch, every step of the lifecycle will be seamlessly connected. Hence, KloudPLM is a complete modular solution for your business, do consider it whenever you are looking for a solution to streamline your entire product lifecycle. Scheulde a demo today to know more.

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