# What is Supplier Management?

What is Supplier Management? Managing the relationship with suppliers: selection, evaluation, negotiation, execution, and building long-term partnerships.

## How it works in practice

Supplier management is the 'quiet management' that determines business outcomes. 80% of store owners don't manage suppliers — they react to them. A supplier's mistake means a stockout. A late supplier means a disappointed customer. An uninsured supplier means disruption. Proactive management means security.

## Related metrics

- Lead Time — supplier management affects lead time
- COGS — supplier negotiation lowers COGS
- MOQ — supplier management includes negotiating MOQ
- Demand Planning — the demand plan is passed to suppliers

## Common misconception

'One supplier is enough.' Single-sourcing is a single point of failure. A supplier running into trouble means your stockout. Best practice: a primary supplier plus a backup supplier for every critical product. Even a backup supplier handling 10% of volume provides security.

## How to fix it

Unreliable supplier? (1) Build a scorecard: delivery time, quality rate, communication, MOQ, (2) Hold a quarterly review with every critical supplier, (3) Build a backup supplier for every top-selling product, (4) Set an SLA with a penalty for non-compliance.

## Real-world example

Apparel store: a single supplier in China. COVID = zero shipments for 4 months. $61,000 in lost revenue. Afterward: a primary supplier (60%) + a backup supplier in Turkey (40%). A second COVID wave: the backup covered it. Zero stockouts.

## Where to start

Run a quarterly supplier audit: a scorecard for every critical supplier. A backup supplier for every top-20% product. A supplier agreement with an SLA — don't operate on a handshake alone.

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Category: Operations · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/supplier-management