Supplier Management Toolkit: Stratification and Governance

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An effective supplier stratification and governance model is key to evolving from a traditional savings model to a value creation-based business model. Many Vendor Management Offices (VMOs) are increasingly building a robust supply base stratification model and strengthening their governance approaches through a strong governance structure, defined roles and responsibilities, an effective communication matrix, and regular performance monitoring to drive actual business value.

It is vital to understand what makes a supplier strategic for any supplier management organization. It is equally important to identify the right set of strategic suppliers to enhance business value through a constructive engagement. Achieving the right balance between investing in a supplier and realizing the potential value requires a well-thought-out supplier stratification model and a robust supplier governance approach.

In this Accelerator, we provide a framework to create a robust supplier stratification strategy based on a prioritization methodology that defines the supply base’s strategic importance across tiers. We also lay out a roadmap to create a strong supplier governance model to help enterprises determine their current maturity states and, accordingly, create an effective action plan.

Scope

All industries and geographies

Contents

This accelerator outlines the approach to establish a robust supplier stratification and governance process and share:

• A guide to effective supplier stratification based on our prioritization framework
• Organizational engagement strategies when selecting strategic vs. routine suppliers
• Ways to create and implement an effective supplier governance model
• Ways to incorporate elements such as a governance structure, roles and responsibilities, communications, and performance monitoring when laying out a supplier governance process