Supplier Life Cycle Management

 https://purchasingpo.blogspot.com/2025/09/supplier-life-cycle-management.html

🔄 Supplier Lifecycle Components

👉 So the cycle looks like this:

• Registration = before Prequalification

• Prequalification = Entry requirements

• Assessment = Ongoing qualitative review

• Evaluation = Quantitative scoring

• Supplier Development= to improve partners

• Requalification = Renewal & continuation check

• Phase-out/Disqualification = to clean the vendor base

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1. Supplier Identification & Registration

• Vendor expresses interest (through supplier portal, RFP, or sourcing event).

• Vendor submits basic details (company profile, tax ID, bank details).

• Internal team verifies and creates the supplier record in ERP.

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2. Vendor Prequalification (Before Onboarding)

Components checked:

• 📑 Legal documents (Trade license, Tax registration, Chamber of Commerce)

• 💰 Financial health (Bank statement, audited accounts, credit ratings)

• 🏭 Technical capability (plant/facility info, equipment, workforce)

• ✅ Certifications (ISO 9001, Safety/OHSAS, Environmental ISO 14001)

• 📋 Past experience (client references, project history)

• 🚫 Risk checks (sanctions, blacklists)

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3. Vendor Assessment (After Onboarding)

Components reviewed:

• 📦 Quality of goods/services supplied (defects, compliance with specs)

• 🚚 Delivery performance (on-time %, lead times, reliability)

• 🤝 Responsiveness & communication (support, resolving issues)

• ⚖️ Compliance with contracts & ethical sourcing policies

• 📊 Risk profile (supply disruption, financial health updates)

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4. Vendor Evaluation (Part of Assessment → Quantitative)

Components scored (KPIs):

• Quality (e.g., 40%) → defect rate, returns, acceptance levels

• Delivery (e.g., 30%) → on-time delivery, adherence to schedule

• Cost/Price (e.g., 20%) → competitiveness, cost savings

• Service (e.g., 10%) → customer service, complaint handling

• Innovation (optional) → suggestions for improvement, new solutions

📌 Output → Scorecards / Rankings → Preferred, Approved, Conditional, or Disqualified Vendor.

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5. Supplier Development (Optional but important)

• Working with underperforming but strategic suppliers to improve.

• Providing feedback, training, or even joint investments.

• Focused on strategic partners in long-term contracts.

🔹 Benefits of Supplier Development

• 🚀 Improved supplier performance (quality, delivery, cost).

• 🤝 Stronger buyer-supplier relationship (partnership approach).

• 💡 Access to innovation and new technologies.

• 📉 Reduced risks (fewer supply disruptions).

• 🏆 Long-term competitive advantage.

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6. Vendor Requalification (Periodic Review – Annual or Bi-Annual)

Components checked again:

• 📑 Renewal of legal docs (trade license, tax clearance, insurance)

• ✅ Updated certifications (ISO renewals, safety compliance)

• 💰 Updated financials (annual reports, credit checks)

• 📋 Performance history (from evaluations & assessments)

• 🚫 Risk re-check (legal disputes, blacklisting, sanctions)

📌 Output → Vendor continues in Approved Supplier List (ASL), or is suspended/removed.

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7. Supplier Phase-Out / Disqualification

• Non-performing, high-risk, or obsolete suppliers are suspended or removed.

• Only active and compliant vendors remain in the Approved Supplier List (ASL).