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How can I improve my supplier lifecycle management?

SAP Supplier Relationship Management can help you improve procurement processes by automating the way in which you choose suppliers. Here's how it works.

The concept of supplier lifecycle management is one of the most important keys to the procurement process. Indeed, your suppliers have a powerful impact on your supply chain.

SAP Supplier Lifecycle Management is one product that you may find helpful. For example, companies using the Materials Management component of the SAP ERP system are acutely aware of the gap that the system does not provide any standard option to initiate the preliminary work of identifying and shortlisting potential suppliers of products or services who meet the company's procurement benchmarks. As a result, steps associated with a supplier's prequalification, such as confirming if the supplier holds necessary certifications or is willing to submit a performance bond for services, have to be managed out of the SAP ERP system until the supplier is selected and its master record is created in the system. SAP Supplier Lifecycle Management effectively attends to the supplier's qualifications and registration gaps. SLC is not only user-friendly for business users and potential suppliers, it also accounts for the system's security that must be in place between the buyer and the supplier through online communication. 

Companies can choose to implement Supplier Lifecycle Management as a standalone application, or they can integrate it with the SAP ERP system and with Supplier Relationship Management, another procurement application by SAP.

SLC is divided into the "buy side" and "sell side," where the buy side is the company that is buying or procuring goods or services, and the sell side is the supplier. The communication and collaboration between the buyer and seller takes place behind the secure firewall using NetWeaver Process Integration.

Take a look at the activities involved using SLC:

  • Buy side. The buyer creates a list of questionnaires and a checklist containing the benchmarks and prerequisites that the seller must meet to qualify to be a supplier. The checklist may include whether the seller has been in the business for the last 10 years or more and whether the seller's turnover is above $2 million. The buyer also assigns scoring to each response from the seller to see if they meet the minimum individual and overall score to qualify for registration from potential supplier to regular supplier.
  • Sell side. The potential supplier can respond to each questionnaire and also attach documentary evidence, such as a valid quality certification for the products. 

Based on the individual and overall supplier scoring against the company's predefined benchmarks, the company, or buyer, can then make a decision about a supplier's suitability and decide whether to begin the business partnership.

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