It is increasingly common for organizations to separate Sourcing from Supplier Management tasks, if not the entire function – it is clear why.

With effective cross-functional working and joint business objectives these concerns can be overcome to make a stronger supplier-facing unit, with a single voice and common message to the external parties that contribute to a high-performing team.

Buying organizations that are highly vulnerable to issues such as reputational damage, business continuity failure and security breaches often have dedicated Supplier Management functions.

Supplier Management encompasses a wide range of risk management, performance improvement and contract ownership activity. Most businesses find it is normal now to have fewer vendor relationships that house massive cost and risk.

Meanwhile, the Sourcing team has a huge responsibility to continually observe the supply market and look for emerging sources of capability and advantage. They run large, complex competitive bids, manage challenging contractual negotiations and enhance value through methods such as cost improvement and improving sustainability in their supply chains.

The advantages

Dedicated supplier performance managers, able to judiciously apply incentive programs. •Full time resource focused on supplier capability development, cost improvement and innovation.

Separation of roles protects the partnership from the relationship battering that competitive bidding can involve.

The disadvantages

Supplier Managers are sometimes inadequately involved in the process of business needs analysis and contracting, which hampers performance management later on.

Future visioning of the supply base can be a low priority when operational imperatives are the focus.

The needs of Supplier Management can overshadow commercial wisdom. Risk management, new product development or new projects mean that the Supplier Managers are not always monitoring whether the current relationship style suits the competitive landscape of the supply market.

With effective cross-functional working and joint business objectives these concerns can be overcome to make a stronger supplier-facing unit, with a single voice and common message to the external parties that contribute to a high-performing team.