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ITIL® Supplier Management
November 5, 2012 at 7:48 PM

Effective Supplier Management

The Supplier Management process first appeared in ITIL® in the 2007 v3 edition in the Service Design book, although it has always been part of Service Level Management in previous versions of ITIL®.
All organizations will have suppliers, but ask yourself are they managed in an efficient, effective and consistent way, and can you say hand on heart that you are getting value for money and seamless quality from these relationships?
Poor supplier management tends to be caused though lack of management and lack of consistency in dealing with suppliers. To ensure management and consistency you need to establish a formal process for Supplier Management. If your suppliers have already become 'delinquents' then it's still not too late, it will just take a little longer and a bit more effort.
Supplier Management is a process that is documented in the ITIL® Service Design book. Like many of the Service Design processes it also has activities that reside across the whole of the service lifecycle, from strategy, through design, transition, operation to improvement.
The Process Starts with
Once you have management backing to establish a formal process, you will need to put a number of things in place. These will include:

  • Establish a formal supplier and contracts Strategy, if one doesn't already exist
  • Establish a supplier and contracts policy (or policies)
  • Identify your suppliers and contracts, and document them in a 'supplier and contracts management
  • information system (SCMIS)
  • Identify what the organizations procurement and contracts policy is and how you will need to interface with it
  • Define roles and responsibilities within the process
  • Define process interfaces
  • Transitioning of new contracts and suppliers. These processes may, and should be different based on the
  • type, size and category of the supplier and the contract

Establish a formal process including activities and procedures for:

  • Supplier and contract evaluation and selection
  • Establishing suppliers
  • Management of suppliers and supplier performance
  • Implementation and enforcement of the supplier policy
  • Maintenance of a Supplier and contracts management information system (SCMIS)
  • Supplier and contract categorization and risk assessment
  • Development, negotiation and agreement of contracts
  • Contract review, renewal and termination
  • Agreement and implementation of service and supplier improvement plans
  • Maintenance of standard contracts, terms and conditions
  • Management of contractual dispute resolution
  • Management of sub-contracted suppliers

Your process inputs will likely include:

  • Business information
  • Supplier and contracts strategy
  • Supplier plans and strategies
  • Supplier contracts, agreements and targets
  • Supplier and contract performance information
  • IT information
  • Performance issues
  • Financial information
  • Service Information
  • Configuration Management System

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