For more than a decade, many industry experts have been advising manufacturers that judicious use of supply chain management (SCM) applications would give them a competitive edge. Effective supplier management is likely to facilitate the building of strategic partnerships. Developing such partnerships with suppliers is vital to a successful supply chain. It allows companies to integrate with their critical suppliers to streamline order management, replenishment and fulfillment; inventory management; and engineering change management. Many companies have been moving toward strategic sourcing, a collection of activities preceding the signing of a contract. Strategic sourcing includes analyzing expenses, identifying potential suppliers, requesting quotations and negotiating contracts, and monitoring and improving suppliers. Companies have also started to limit the number of suppliers they do business with by implementing vendor review programs that identify suppliers with operational excellence. A close buyer-supplier relationship is important because suppliers in such a relationship are easier to work with and provide better service.
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