Supplier Management plays a key role in Service Management. It manages Suppliers, typically third party, although some can be internal suppliers, and services they provide to the client. The aim is to ensure quality, consistency and value for money, in other words, at the right price.
Activities and tasks in this process stem from the Supplier Strategy, which is an input from Service Strategy and associated policy.
It is important to create a Supplier and Contract Database (SCD) which enable consistent efficiency and effectiveness when implementing the policy. In an ideal world the SCD would make up part of the overall Configuration Management System (CMS) or Service Knowledge Management System (SKMS). Data stored in these repositories should hold details about contracts, their length, what services are provided by suppliers and any associated Configuration Items (CIs).
In the case of using external suppliers it is extremely important to draw up a formal contract. Steps to achieve are outlined below:
- Identify Business Requirements
Produce a program of requirements, provide agreement by documenting a strategy and policy, and finally develop a business case.
- Evaluate and select new suppliers
This is covered as part of the Service Design process. Points to consider are gaining references, assessing their ability and also financial position.
- Categorizing suppliers and contracts
This is a time consuming process so the amount of time energy put into this process is very much dependent on the supplier in question.
- Introduce new suppliers and contracts
It is key to utilise the Change Management Process to introduce new suppliers into the SCD. Other Service Management processes such as IT Service Continuity Management (ITSCM), Availability Management and Information Security Management will all have an interest in the new supplier and their abilities to provide service.
- Manage performance of suppliers and contracts
Typically this is performed at the 'coal face' or Operational level. The supplier must adhere to the clients Service Management policies and processes. The performance of suppliers will also need to measured and managed with appropriate action taken if the supplier is under performing. The supplier needs to provide the service that the business requires, and if that changes then the supplier will need to change service provision accordingly.
- Renew or end a contract
This is a strategic function and will the existing contract be relevant in the future if the business model changes? If the supplier is no longer required an accurate assessment of the repercussions needs to be carried both from a financial and operational perspective.