Importance of Supplier Management in Strategic Operations Management

STRATEGIC OPERATIONS MANAGEMENT 1
STRATEGIC OPERATIONS MANAGEMENT
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STRATEGIC OPERATIONS MANAGEMENT 2
Analysis
A Supplier refers to an individual or an organization that supplies services or goods. They
provide an organization with the resources required for the production of its goods and services.
Supplier management, on the other hand, is the process through which organizations ensure that
there is value for money spent on suppliers. In the contemporary corporate world, many
organizations have realized the important role played by suppliers in their overall success
(Hammer and Champy, 1993). Organizations are therefore increasingly becoming concerned
about their relationships with suppliers. Supplier management, therefore, plays an important role
in an organization. It promotes the effectiveness and ensures that an organization’s supply chain
is accountable and appropriately optimized.
Supplier management minimizes an organizations vulnerability to reputational, business
or financial risks. This process makes it possible for organizations to mitigate potential risks
before they occur. It also helps an organization to realize maximum profits besides helping them
to control their costs (Wisner, Tan and Leong, 2014). An organization’s supply chain may need
to be improved in order to meet immediate organizational needs to enhance value and improve
performance. This can only be carried out effectively if the correct data is available. This data
can be gotten through supplier management.
With the central role played by suppliers in an organization’s processes and activities and
the fact that suppliers touch on every part of a business, a smooth flow of operations is dependent
on effective supplier management (Zhang, Li, Wu, and Meng, 2016). Supplier management
facilitates uninterrupted flow of resources and services required by an organization.