How do you develop and maintain a supplier database and portfolio?

1 Define your supplier criteria

When developing a supplier database and portfolio, the initial step is to determine criteria for selecting and categorizing your suppliers. These criteria should be in line with your business targets, needs, and values, as well as reflect the level of risk, quality, and value that you anticipate from your suppliers. Common criteria include supplier location, capacity, and availability; supplier reputation, reliability, and responsiveness; supplier certifications, accreditations, and standards; supplier pricing, payment terms, and discounts; and supplier innovation, sustainability, and social responsibility. You can use this data to generate a supplier profile template that you can fill out for each potential or existing supplier. This will help you compare different suppliers and identify any gaps or opportunities in your supply base.

2 Collect and organize your supplier data

In order to collect and organize your supplier data, you should use your supplier profile template. Your data can be sourced from online directories, databases, and platforms, as well as trade shows, events, and publications. You can also get referrals, recommendations, and testimonials from other sources. Additionally, you can use requests for information, proposals, or quotations to obtain data. Finally, supplier audits, assessments, or surveys are also useful for gathering data. To store and manage your supplier data, you can use a spreadsheet, a database software, or a specialized supplier management system. It's important to make sure that the data is accurate, complete, and up-to-date. Additionally, you should have a backup and security plan in place. Lastly, make sure to assign a unique identifier to each supplier and use consistent naming and formatting conventions.

3 Segment and classify your suppliers

The third step in the process is to segment and classify your suppliers according to your criteria and data. This will help you create a portfolio that displays the importance and performance of your suppliers, as well as the type and level of relationship you have or want to have with them. To achieve this, you can use the Kraljic matrix which categorizes suppliers based on their strategic impact and supply risk, or the supplier preferencing matrix which categorizes them based on buyer-supplier relationship power and attractiveness. Additionally, you can use the supplier performance scorecard to categorize suppliers according to predefined metrics and targets. You can then create a visual representation of your supplier portfolio through a chart, matrix, or dashboard. It's important to review and update your portfolio regularly, as well as communicate it to internal and external stakeholders.

4 Develop and implement your supplier strategy

The fourth step is to develop and implement your supplier strategy based on your supplier portfolio. This should outline objectives, actions, and resources for managing suppliers, and how they align with the overall business strategy. Your strategy should also include aspects such as selection, qualification, and contracting; development, collaboration, and innovation; monitoring, evaluation, and feedback; recognition, reward, and retention; and risk, issue, and conflict management. You should tailor your supplier strategy to each segment and category's specific needs and expectations. Different tools and techniques can be used to achieve desired outcomes; for example, segmentation and classification to prioritize resources, relationship management to build trust with suppliers, development and innovation to enhance capabilities and performance, performance management to measure quality, delivery cost and service, as well as risk management to identify potential threats in the supply chain.

5 Review and improve your supplier database and portfolio

The final step is to review and improve your supplier database and portfolio on a regular basis. You should monitor and analyze your supplier data and portfolio, benchmarking it against best practices and industry standards, and seek opportunities to learn from other businesses or experts. Doing this can bring numerous benefits, such as increased efficiency, effectiveness, and transparency in your supplier sourcing and management processes, as well as enhanced supplier performance, satisfaction, and loyalty. Additionally, you can reduce supplier risk, cost, and waste while improving supplier innovation, differentiation, and competitiveness. Furthermore, you can strengthen supplier alignment, integration, and collaboration. By following these steps, you can develop and maintain a supplier database and portfolio that supports your business objectives and delivers value to your customers.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?