What is manageable supply base?

Supply Base Management Definition Supply Base Management (SBM) is a systematic dynamic approach for strategically managing the whole supply base which might include current suppliers, minor suppliers and potential suppliers (Melnyk et al., 2009).

How do you manage a supplier base?

In order to effectively manage the supplier base – adding new vendors, rehabilitating dysfunctional vendors, and eliminating disqualified suppliers from the vendor database, having a robust SBM solution is key.

What is the importance of supply base?

A supply base is defined as the portion of a supply network that is actively managed by a buying company. The buying company, referred to as the focal company, manages the suppliers in the supply base through contracts and purchasing of parts, materials, and services.

What is rationalized and optimized supply base?

Often used as interchangeable terms, the goal of rationalization is to reduce the number of suppliers in an MSP program to cut costs, enhance efficiency, and strengthen relationships; while optimization focuses on refining the supply base to make it as efficient as possible—including cutting and adding suppliers where …

What are the advantages of supply base rationalization?

Some of the advantages of having a good supplier rationalization program are:

• Reduced transactional overheads.
• Better buying costs and terms.
• Develop best in class suppliers, for each category.
• Improve supply quality and reliability.
• Reduce shipping and handling costs.
• Implement stronger contractual agreements.

What is supply base rationalization?

Supplier rationalization, also known as supply base reduction [SBR] is the process of shrinking the supply base by reducing the number of active suppliers. The primary agenda of supplier rationalization is to streamline the organization’s spend to fewer suppliers and drive better value from those relationships.

What are the major sources of supply base risks?

Supply disruptions can come from a wide variety of sources, including physical damage at production facilities, natural disasters, strikes and labor disputes, capacity issues, inventory problems, incorrect forecasts and delays.

How do you set up a supply base?

5 Steps to Improve Supply Base Building & Supplier Quality Management

1. Determine Selection Criteria.
2. Perform Supplier Audits.
3. Track & Rate Suppliers.
4. Track Supplier Performance.
5. Supplier Management.

What is supplier base reduction?

Supply base reduction [SBR] is the process of deliberately reducing the number of active suppliers in the supply base. The motivation is to consolidate the organisation’s spend to fewer suppliers and to leverage better value from those relationships.

What are the benefits of supply base optimization?

Optimize Your Supply Chain

• It improves the lines of communication.
• It increases access to information.
• It ensures that those rules that dictate the management of your business are firm and present.
• It reduces costs.
• It increases everyone’s sense of control.
• It streamlines points of contact.

What are the disadvantages of supply base rationalization?

Supply Base Rationalisation – Five Potential Negatives

• Ignores the Positive Savings from Price Dispersion.
• Leads to Increased Maverick Spend.
• Weakens Procurement’s Negotiating Position.
• Increased Risk of Price and Product Creep.
• Reduced Supplier Diversity, Flexibility and Innovation.

What is supplier base Rationalisation?