The purpose of the Supplier Management process is to manage interactions with suppliers and partners formally by selecting them based on their ability to meet identified requirements, and managing performance against the agreed commitments.

Outcomes 

As a result of the successful implementation of this process:

• Attitudes and behaviors are promoted that encourage mutual success
• Procurement and delivery of products and services are optimized for maximum value across supplier relationships
• Obligations are met as efficiently and effectively as possible by both parties in the relationship
• Optimal value is achieved for costs in maintaining supplier relations

Scope

Involves all aspects of managing relationships with suppliers and outsourcers and of the procurement of assets and services. Addresses the complete supplier and procurement life cycle from strategic considerations to tactical considerations, and to operational considerations.

Includes

• Agreement on joint architecture and risk controls
• Negotiation and enforcement of contracts
• Supplier evaluation, selection, and relationship management
• Supplier performance review, including:
  • Benchmarking
  • Terms and conditions conformance
• Procurement (placing the order), both against established contracts and for off-the-shelf items
• Internal and external suppliers.
• Formalizing the operational level agreement (OLA) items, where they are to be fulfilled by an external supplier, within an underpinning contract (UC)

Excludes

• Service Level Management
  • Establishing the substance of OLA items which relate to a supplier
  • OLA and UC Service monitoring.
• Physical logistics (Facilities Management)
• • Product and services requirements and specifications (from Solution Design, for example)

Key performance indicators

• Number of suppliers complying with terms and conditions of contracts
• Number of suppliers breaching contracts
• Number of supplier reviews
• Number of items in supplier catalog
• Number of suppliers

Relation to other processes

• Financial Management provides financial reports and financial analyses related to suppliers.  Purchase order status is reported to this process as well.
• Supplier Management coordinates with Asset Management about requesting and receiving new assets. 
• Development processes such as Solution Development and Integration as well as Solution Test obtain new products or services for solutions through this process. 
• Underpinning contacts must be coordinated with Service Level Management. 

Further reading

Read Supplier Management in the ITIL® documentation.