Tiered Supplier Management Can Remove Tears from Supplier Management

Do supplier relationships make you want to cry?

In an earlier blog post on vizibl.co I discussed the importance of creating a ‘statement of intent’ with your most critical vendors. In short, the statement of intent is a document that brings an organisation and its most important suppliers onto the same page when it comes to the strategic direction of the relationship. You can read more about it here.

Today we are going to build on that idea by introducing the concept of a tiered management structure to ensure the strategic goals of the relationship are acted upon and met.

A tiered management structure uses a layered approach, with each tier having specific responsibilities for managing different aspects of the business. The tiers of the relationship can be formed in a number of ways but the most common would be to begin with the day to day operation level tier and cascade up towards a strategic board of directors tier (as highlighted in the figure below). Each of the tiers hold the responsibility for a particular area of the relationships and ensures work for the other tiers is passed up or down the chain.

A typical three tier organisational structure might look like this.

1. Operational Management Groups-Responsible for the day today operations within the partnership. A regional project group would be a good example of such a tier.
2. Joint operations committee-This group sets continuous innovation and implementation priorities. It tends to work across regions on projects of strategic significance to the relationship.
3. Board of Advisors-The highest tier of the relationship is responsible for overall sponsorship and strategic direction of the relationship. This is the final level of escalation for any issues that may arise during the partnership (issue escalation will be discussed later in this paper). This group is ultimately responsible for ensure the relationship functions as highlighted in the statement of intent.

To learn more tiered management structures or other governance methodologies that can be implemented to ensure success is achieved through supplier relationships, read our Governance white paper. The paper can be freely downloaded here.