"Capabilities for Managing a Portfolio of Supplier Relationships"

Stephan Wagner and Roman Boutellier

Business Horizons

November-December 2002, pp. 79-88

This article identifies five phases of managing strategic partnerships over time:

1. Prepare—This includes defining strategic and operative requirements, setting up a team, and ensuring support by top management;
2. Identify potential partners—Establish and select criteria; assign priorities; and identify potential strategic partners;
3. Evaluate and select partner—Contact potential strategic partners; Gather primary and secondary data on potential strategic partners; Evaluate potential strategic partners; Decide with team; and offer feedback;
4. Establish relationship—Document expectations; Document modalities of cooperation; and offer continuous and immediate feedback; and
5. Assess relationship—Continue relationship at existing level; Intensify relationship and solve problems; and (possibly) reduce/end relationship.

Ten guiding principles are also identified for supplier strategies:

1. Distinction—Distinguish between strategies aimed at managing the entire supplier portfolio versus individual supplier relationships;
2. Focus—Set up individual supplier strategies only for "key" suppliers based on volume and strategic importance;
3. Coordination—Coordinate the interests in the strategic partner of all internal functions throughout the process;
4. Use of information—Make the most of all available critical information at the time when supplier strategies are created;
5. Documentation—Ensure that supplier strategies are written down;
6. Communication—Communicate supplier strategies throughout the company and make them accessible in written form;
7. Use of opportunities—Constantly look for arising opportunities and feed them into the strategies;
8. Advancement—Update and revise strategies on a regular basis in order to adapt to internal and external changes;
9. Revision of assumptions—Continuously verify assumptions by checking the validity of the underlying supplier-related factors; and
10. Performance monitoring—Monitor supplier strategy implementation and assess achievement of strategic goals.

Back to top of page