Strategic Operations Management: Supplier Management Analysis Report

This report provides an analysis of strategic operations management, specifically focusing on the critical role of supplier management. It defines suppliers and supplier management, emphasizing their importance in ensuring a smooth supply chain, mitigating risks, and optimizing costs within an org...Read More

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.

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An organization can either be profitable or make losses depending on prevailing
circumstances and how it carries its operations. In a situation suppliers are not appropriately
managed, the entire supply chain is likely to fail, leading to massive losses in an organization
(Jacobs, Chase and Lummus, 2014). Supplier management, therefore, ensures that an
organization’s supply chain remains operational hence saving it from any associated losses.
Reflection
Among the factors that organizations consider in their selection of a supplier is the
associated cost. They are therefore expected to provide goods that meet agreed expectations,
match business needs and perform as agreed upon. Suppliers, therefore, exist to offer their
services and products at the lowest possible cost in a timely and more efficient manner while
ensuring that such products and services are in their best quality to avoid stressing their clients
financially. An organization can change its suppliers at any time and pick new suppliers at any
given time if it deems it necessary. These decisions can be made at the departmental levels
without the input of top management because departments are deemed to have a clear
understanding of their needs.
Under transactional a good relationship with suppliers would constitute a year-round
reduction in cost by the supplier, competitive tendering and short-term contracts to encourage
competitiveness(Procurement,2013). On the other hand, good relationships under a collaborative
approach would constitute the regular use of most visible suppliers within an organization as
well as shared rewards and risks, openness and mutual trust. Transnational is considered to exist
where multiple levels of engagement are developed throughout an organization. It also includes
management of the number of suppliers. Partner supply relationships would exist where there are

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abundant communications across all levels, timely response to supplier needs and provision of
the required resources when needed(Procurement,2013).
Factors considered for strategic suppliers include shared risks, rewards, and shared
communications, shared investment, shared vision and strategy. With preferred suppliers factors
such as the quality and discount rates are considered (Chen and Baddam, 2015).
References

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Chen, J.Y. and Baddam, S.R., 2015. The effect of unethical behavior and learning on strategic
supplier selection. International Journal of Production Economics, 167, pp.74-87.
Hammer, M. and Champy, J., 1993. Reengineering the corporation: A manifesto for business
revolution.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain
management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Procurement Leaders.,2013. Strategy guide: supplier relationship management. Procurement
Leaders, Global Intelligent Network, www.procurementleaders.com [Online], pp. 1-11.
Available from https://www.procurementleaders.com/AcuCustom/Sitename/DAM/052/sample-
strategy-guide-SRM-0613_1.pdf (Accessed: 29 July 2018).
Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.
Zhang, R., Li, J., Wu, S. and Meng, D., 2016. Learning to select supplier portfolios for the
service supply chain. PloS one, 11(5), p.e0155672.