7 Reasons that your business ought to choose vendor management

Vendor management is a new management mechanism proposed to improve the relationship between enterprises and suppliers under the new economic situation of logistics and procurement “.  Aiming at realizing the goal of “expanding cooperation and mutual assistance partnership, jointly developing and expanding market share, and achieving win-win”.

In the supplier-manufacturer relationship, there are two typical relationship models: traditional competitive relationship and cooperative relationship, or win-win relationship. Supplier management maintains information on preferences among customers, intermediaries and suppliers to ensure successful partnerships.

The main contents of vendor management include:

1. Accurate and timely analysis of procurement needs
2. Supplier evaluation and performance appraisal system
3. Supplier database
4. Supplier management and qualification certification
5. Procurement information management and bidding management
6. Multi-part collaboration and information sharing

The significance of implementing vendor management

1. Reduce costs.

Cost is the “permanent pain” of the enterprise, and the acquisition cost ratio increases with the concentration of core competencies and the increase in outsourcing ratio. Therefore, the supplier is directly related to the final product cost.

2. Improve product quality.

Research shows that 30% of quality problems are caused by suppliers, and good supplier management can effectively improve product quality.

3. Reduce inventory.

By reducing inventory pressure, manufacturers transfer advanced inventory to suppliers, which is not conducive to building partnerships. However, vendor management can adjust inventory management to solve the problem.

4. Shorten the delivery time.

80% of the product lead time is caused by the supplier, so shortening the product lead time starts from the original.

5. Accumulate manufacturing resources.

The rapid development of information technology and Internet technology provides modern manufacturing enterprises with the conditions required for real-time transmission and exchange across information technology fields and industries.

6. Improve core competitiveness.

Pay attention to the core competitiveness of the enterprise, develop the core business, and participate in the development of new products through suppliers.

7. 7. Contribute to the development of new products.

Involving suppliers in the development of new products is conducive to improving the core competitiveness of enterprises.