It goes without saying that pursuing a new relationship is hard, whether it’s business or personal. In order to land a strong connection in either realm, you have to be willing to put yourself out there. Strong relationships come with a myriad of benefits and this is doubly true in the world of business. Supplier lifecycle management gives businesses and suppliers the ability to form strong bonds through the use of aggregated data and visibility. Strong supplier relationships mean better supply chain management, and software makes forming these partnerships easier.

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When suppliers enjoy working with a company,  they are far more likely to pass on savings and price cuts. So it’s always worth investing in constructive, rewarding interactions with partners and affiliates. In fact, supplier lifecycle management should be central to your procurement processes. If you want to maximize the value of your external relationships, you’ve got to keep a close eye on them. Nurture them, expand them and grow them into loyal, mutually beneficial arrangements.

Table Of Contents

• What Is Lifecycle Management?
• What Is Supplier Lifecycle Management?
• Stages of Supplier Lifecycles
• What Is Supplier Lifecycle Management Software?
• Benefits of Software
• How to Choose the Best Supplier Lifecycle Management Software
• FAQs
• Final Thoughts

What Is Lifecycle Management?

Although supplier lifecycle management is the primary focus of this article, it’s important to have a strong baseline understanding of the broader concept before diving deep into the topic.

Lifecycle Management is a crucial process in maintaining supply chain sustainability. It’s a broad managerial concept that deals with the procurement, deployment and maintenance of every business asset, including products, warehouses, suppliers, retailers and more.

Managers can leverage various procedural and analytical tools to consolidate economic, social and environmental aspects of a product or asset to maximize its lifecycle and ensure compliance.

What Is Supplier Lifecycle Management?

Supplier lifecycle management is an end-to-end procedure of managing external suppliers in a transparent and organized way. Third-party suppliers are major stakeholders in improving your supply chain efficiency. This process aims at minimizing disruptions arising from external forces. It focuses on building healthy relationships, transparent workflows and streamlined interactions between your business and its external suppliers and vendors.

The supplier lifecycle management process consolidates two primary procurement cycles — procure-to-pay and source-to-contract. Managers can merge every supplier’s master data and bind procurement and sourcing cycles for quick and intelligent workflows. You can also analyze supplier performances for extracting maximum value from their services while reducing associated costs and risks.

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Stages of Supplier Lifecycles

Most supplier lifecycle management solutions split the journey into eight key areas. They start with the need to source suitable candidates and end with the long-term care of profitable, productive relationships.

1. Qualification

This is where the journey begins, and it involves searching for or appealing to, suppliers interested in starting a new relationship. Oftentimes, businesses advertise their needs as they’d advertise for an open job position. Potential suppliers are invited to register their interest if they feel they can fulfill the requirements.

2. Evaluation

Again, much like a recruitment search, the business then assesses these candidates. In order to avoid reputational and commercial risks, it’s important to eliminate suppliers that aren’t suitable. There are all kinds of ways to make a determination, from scorecards to independent evaluations, direct discussions and on-site inspections.

3. Selection

After assessing all of the candidates, the field of suppliers should be sufficiently narrowed down to make a choice. The decision will have an impact on every part of the business, so take your time. The goal should be to select an organization that is capable of handling long-term interaction. You don’t want to put a lot of effort into securing a supplier and then have them terminate the relationship after a year. No one likes sudden breakups.

4. Onboarding

Part of building a long-term relationship is successful strategic supplier onboarding. The new affiliate must be properly inducted. While the supplier has already agreed to meet requirements, they can only do so with enough information about the how, when, what and where of it. Onboarding is also the perfect opportunity to set up monitoring processes that measure performance and valuable data collection.

5. Supplier Performance

Consistent monitoring is a standard part of supplier management. If you don’t keep a close eye on transactions and communications, there’s no way to know if they’re beneficial. Supplier lifecycle management software makes this easy, as it provides a window into the entire journey. Businesses can isolate and assess the productivity of their suppliers at every stage, from purchase to delivery.

6. Identifying Risk

Obviously, the goal should be to eliminate as many risks as possible. However, you can only do this if you identify them first. Risk management is designed to protect your business in the event of a breach of contract, late deliveries, data loss, quality failure and more. No matter how much you trust a supplier, it’s essential to safeguard yourself against unexpected crises.

7. Monitoring Supplier Development

Supplier development becomes a concern after you know the relationship is a valuable one. It sees a business work closely with external partners to try and streamline transactions, which is beneficial for both parties. The faster a supplier can deliver on and close individual purchases, the more money they’ll earn and the more efficient your operation will be.

8. Supplier Management

The final stage of supplier lifecycle management is maintenance. If a relationship is worth holding on to, you’ve got to continue to invest in its future. This is absolutely vital because it’s really the broader objective of all of these processes. The goal, from start to finish, is to create lasting, profitable partnerships.

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What Is Supplier Lifecycle Management Software?

Supplier lifecycle management software or supplier relationship management software is a set of tools for establishing and maintaining a mutually beneficial relationship with third-party suppliers. It facilitates communications, tracks supplier performance and issues purchase orders.

The software is usually available as part of an SCM suite. But standalone platforms are also available, which you can integrate if your existing SCM software doesn’t support supplier lifecycle management.

Its key features include:

• Centralized repository of supplier data like pricing, certification and more.
• Self-service modules for suppliers to maintain their information.
• Quick reordering processes.
• Supplier performance tracking.
• Integration with ERP, SCM and supply chain visibility software.
• Flexible matrix to compare and qualify suppliers based on performance, location, category and other metrics.
• Supplier auditing modules to comply with internal policies and guidelines.

Primary Benefits of Software

According to a recent report, the global lifecycle management software market is expected to grow at a CAGR of 20.47%. North America will contribute 44% of the global growth and will dominate the market at least till 2025.

As businesses around the globe realize the benefits of a supplier lifecycle management solution, you should also start weighing your options or risk being left behind.

Assessing Supplier Risk

Without software in place to drill down into the inner workings of a supplier, it can be very difficult to evaluate the risks of a long term relationship. Going in blind to something that helps define the efficiency of a supply chain is a recipe for trouble. A supplier can pass on performance metrics, but lifecycle management tools add credibility to their claims. After all, if a supplier has nothing to hide, allowing a future partner to see how they work shouldn’t be an issue.

Improving Collaboration

Open lines of communication help keep supply chains moving. Without the ability to quickly talk to a manager, team members, suppliers, manufacturers and other important parties, everything would soon bog down. Procurement specialists need to be able to reach their suppliers fast in case urgent changes need to be made. Without an easy way to get in touch, a business could easily fall behind demand or simply be out of the loop. A proper lifecycle management platform contains features that make communicating with suppliers as easy as sending an instant message.

Enforcing Compliance and Regulations

Each business has unique requirements and this remains true within supplier relationships. A company that deals with items that require compliance with specific laws or regulations needs to be able to trust their suppliers to do the same thing. If an organization that deals with medical tools, supplies and the like cannot trust a supplier to take necessary precautions with their products, then they should definitely be avoided.

How to Choose the Best Supplier Lifecycle Management Software

Every company has unique needs, and there isn’t a single supplier lifecycle management solution that can perfectly fit every type of business. To start your software selection process, you can check our article on the best vendor management software.

You must carefully identify your unique requirements like the number of suppliers, supplier and warehouse locations, procurement workflows, and KPIs to evaluate supplier performance. Look for a solution that fulfills all your requirements without going over the budget.

SelectHub has devised a nine-step process called lean selection that ensures you determine the right set of requirements and choose a platform that ticks all the boxes. For a personalized recommendation, you can use our managed selection services.

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FAQs

What’s the first step in the supplier lifecycle?

The first step in supplier lifecycle management is supplier qualification. Potential suppliers are shortlisted based on applications and advertisements. After that, procurement officers match the shortlisted suppliers against the requirements mentioned in solicitation documents to find a perfect fit for their business.

What’s the difference between supplier lifecycle and supplier relationship management?

Supplier lifecycle management is a broader managerial concept encompassing every workflow, from identifying the perfect supplier to building a lasting and profitable relationship. It includes supplier relationship management, supplier information management and many more segments.

What is supplier performance management?

Supplier performance management is the analysis of a third-party vendor’s performance throughout its association with your business. You analyze various metrics like delivery time, compliance, responsiveness and ease of doing business with the supplier to accurately judge how well they perform against your standards and whether you need to change the vendor.

Final Thoughts

The single best way to optimize supplier lifecycles is with a targeted software solution. Technology is an invaluable asset because it takes much of the manual work out of generation and maintenance. Supplier lifecycle management software allows businesses to focus on strengthening relationships, as they’re no longer spending time chasing after invoices, filing documents or writing reports.

Plus, the more visibility you have when it comes to your own organization, the more honesty you can offer suppliers. Trust is a big part of modern contracts. The best way to build stable bonds is by listening and responding to concerns in an authentic manner. It’s pretty simple: just put your suppliers at the heart of the business and make them feel important. If you do that, you’ll have a long, successful run with your suppliers.