Supply Base Management (SBM)

Reducing an organisation’s supplier base is often a key aim of any procurement professional in a new role. It is always assumed ... that aggregation is right and less is more when it comes to the long tail of suppliers ... (CIPS Australia: An introduction to supply base management).

Information about Supply Base Management (SBM)

SBM consists of the four main elements: management of major suppliers, management of minor suppliers, scouting, and transition management. Management of minor suppliers incorporates (1) supplier evaluation to identify process capabilities, strengths and weaknesses; (2) supplier development, where there is a need and where current supplier capacity is lacking, (3) supplier improvement by working with suppliers in improving those areas or capabilities that are needed but not adequately developed; (4) supplier education to make sure suppliers understand the goals and core values of a buying organisation, how the buying system operates and how they are evaluated; and (5) supplier integration to facilitate integration of suppliers and their systems into the buying organisation's system. Scouting is a proactive approach that seeks to identify and recruit the best suppliers for the company rather than waiting for them to approach the buying organisation. The scouting function also carries out competitive intelligence analysis on the supply chains of major competitors to identify potential trends and development changes and to assess the implications of these changes.

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