Procurement Terms
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Sourcing is the process of finding and contracting with Suppliers for goods and services. A highly simple principle but very complex to deliver in practice. There are a number of steps within the sourcing process and Organizations should fit the sourcing process to their wider business processes.
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Spend Analysis is the activity of analysing the spend of an Organization. The activities main aims are to create an overall view of the spending of the Organization and to investigate any risks and opportunities from the analysis. It is very common that an opportunity assessment activity would also be completed as part of the analysis process to create a series of projects that delivery operational or financial value to the Organization.
Supplier consolidation is the strategic approach of optimising suppliers to ensure the best fit to an organization requirements. Done correctly, supplier consolidation will improve the application of a supplier management progam, create savings through spend consolidation and allow allocation of resources into other parts of the procurement function.
Supplier Consolidation is a procurement strategy that can be used to simplify an organizations supplier base that can reduce the supply chain risk exposure of an organization whilst improving the ability to reduce the costs of a particular good or service. For example, reducing 10 suppliers providing the same or similar services into 2 suppliers can reduce the risk and increase the economies of scale to reduce the overall service cost.
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Supplier Enabled Innovation, sometimes Supplier Innovation, is the concept of working directly with suppliers to jointly innovate to produce improved products or services. Supplier Innovation can deliver significant competitive advantages to organizations that allow them to deliver improved products or services that better satisfy end customer needs. Because of this, it has the potential of generating top-line organizational growth.
Supplier Indexing sometimes referred to as the Dutch Windmill is a method of analyzing buyer-seller interdependence by combining the buyer's purchasing perspective of the supplier and the supplier’s perspective of the buyer. The method results in 16 different business-to-business relationships, each detailing different supplier and sourcing strategies.
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Supplier Information Management is the process of obtaining, controlling, and analysing supplier data. This enables numerous digital processes that support the operation of most of today’s modern procurement functions. A clear set of management principles ensures that the digital procurement processes work so that the benefits that digital solutions can deliver are realised.
Supplier Enabled Innovation, sometimes Supplier Innovation, is the concept of working directly with suppliers to jointly innovate to produce improved products or services. Supplier Innovation can deliver significant competitive advantages to organizations that allow them to deliver improved products or services that better satisfy end customer needs. Because of this, it has the potential of generating top-line organizational growth.
Supplier Management is the collective term for all the procedures and processes that managing suppliers entails. At a high-level Supplier Management can be split into distinct areas; Supplier Lifecycle Management, Supplier Relationship Management, Supplier Information Management, Supplier Innovation & Supplier Risk Management. A successful Supplier Management program can yield significant benefits to an organisation that can impact top-line and bottom-line performance.
Supplier Segmentation, or Supplier Positioning, refers to the process of classifying suppliers in terms of their importance to the organization. It is an integral part of a Supplier Management program that helps define the resources, processes and procedures that are applied to a supplier relationship.
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