The generation of the added value so honored by customers takes place today in vertical as well as horizontal networks in industries everywhere. The quality of the cooperation of a company with its key suppliers is a decisive factor for its competitiveness. Strategic supplier management secures opportunities for everyone involved, customers as well as suppliers.

Companies which are global leaders are aware of the special significance and the leverage of their supplier management and work constantly and emphatically on the steady improvement of their added value networks. They continuously evaluate their suppliers and cooperation partners, invest in long-term relationships, and stop buying from any supplier whose performance is inadequate. The selection of the right number is just as decisive a challenge as the selection of the right suppliers.  

Supplier management assures continuous value contribution  

Supplier management addresses three strategic value drivers directly. First of all, it assures quality for the external customers. Consistently high quality of products and services offered to the end consumers is not possible without the implementa­tion of a strategically oriented supplier selection and evaluation system. Second, the loss of sales due to supply bottlenecks is avoided. The goal-oriented establishment and consideration of qualitative criteria during supplier evaluation and selection is the pre­requisite for dependable supply quality. Third and finally, market share can be increased only by introducing innovative products which in turn are based on the long-term integration and development of the right suppliers.

Moreover, the cost situation and competitiveness are also ­directly dependent on the purchase prices realized in the added value network. So another strategic goal of supplier management is seen in the constant tracking and evaluation of the price structures. Global leaders set a mark of three to eight percent annually as a constant value contribution, but at the same time they initiate the necessary measures to ensure that the suppliers do their part to maintain or improve their own competitiveness by taking steps to optimize costs.

The right selection of cooperation partners  

The long-term design and orientation of strategic supplier ­relationships and partnerships is one of the management tasks most critical to success in companies which are embedded in added value networks. The goal here is to enter into cooperative relationships with selected suppliers and to maximize the joint added value.

Global leaders achieve this goal by continually going through an optimization process ranging from the supplier selection and supplier evaluation to supplier development and integration and, if necessary, to phasing out suppliers.  The core challenge is the selection of the right number and the right suppliers. Quality and quantity must be regarded as being of equal importance. The objective is the establishment and maintenance of an optimal supplier basis, e.g., to enter into strategic supplier relationships with a small number of selected partners and into opportunistic relationships with others. The selection of a supplier is to be carried out as a conscious decision either for an existing supplier or for a new one.  
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