Supply management is one of the key components of a successful business, regardless of its niche or service portfolio.
Once you find a suitable supplier or B2B partner with the items or services you need to remain operational at peak capacity, you need to ensure that a supply management plan is in effect.
You cannot underestimate the importance of a supply management plan for your business because the gaps in it will lead to problems with logistics, poorer relationships with your customers, and a drop in revenue as a result.
Statistics prove this point. According to the report by InvespCRO:
- 57% of businesses have poor visibility across their supply chain
- 63% of companies don’t use proper technology to monitor their supply chain performance
- 7% of businesses also struggle with the financial costs of maintaining their supply chains
There is no doubt that the problems described by these stats come from a poor and ineffective supply management plan because a good one would contain the solution to each of them.
So, as you might have already guessed, drafting such a document takes effort and attention to the smallest details. This is due to legalities and mutual obligations, which will require careful listing and formatting.
With that said, let’s take a look at what you need to write an effective supply management plan that satisfied both parties involved in the supply chain.
1. Start with a Supply Management Plan Overview
The first thing that your supply management plan should include is the front page with all the essential information about the subject of this plan. This is a short overview that provides a brief sum-up of the main stipulations, including:
- Proposal – general details of the cooperation between the company and the supplier.
- The main recipient of the goods – the name and legal address of the company that receives goods from the supplier.
- The description of product categories – all products that the company will receive from the supplier and the proposed budget for the delivery of each of them.
- Contact details – should include the names and job titles of people responsible for the supply management plan from both sides involved.
- Date of submission – the date when both sides signed the plan.
This page should also include the general timeline of the cooperation and the delivery schedule for each product mentioned in the supply management plan.
Including the overview page to your supply management plan is essential because you can refer to it every time you and your supply partner have questions, without having to review the entire document.
2. Create a Supply Procurement Policies Outline
This is an essential part of your supply management plan because, in it, you will specify why you’ve chosen your supplier. But apart from that, there are quite a few other important stipulations that this section will include:
- Purchasing authority – the name of the company that buys products, which items it will purchase, the person who oversees the delivery of the products.
- Spending limitations – the maximum budget allocated to the purchase and delivery of the goods within a certain timeframe.
- Reason for choosing the supplier – product quality, delivery schedule, pricing, and other factors that influenced the choice of the supplier.
- Contract details – the description of the document that confirms the partnership between the company and the supplier.
- Ethical conduct – includes the confidentiality agreement, conflict resolution procedures, supply chain risk management, and other conditions that ensure the efficacy of the supply management plan.
This section needs special attention from both sides involved in the plan because the details described in it regulate the relationship between the company and the supplier while this plan is in effect.
3. List Quality Assurance Requirements
Under quality assurance (QA), you will include the quality characteristics set out by you as a customer, from the general performance of the product to separate product features.
The list of the QA requirements will depend on the specificity of the products, but here are a few examples just to give you an idea:
- Product defects – make the definition of a product defect, explain how it will be evaluated, and how it can impact the production process.
- Warranty period – the timeline, within which you are allowed to exchange the product for a new one.
- Product inspections – how often the quality of the products will be reviewed and what measures you will take if the supplier violates your QA agreement.
When it comes to listing QA requirements, the devil is in the detail. If you skip something, you might end up with the problems that we described in the introduction. So, make sure this section is well-edited and proofread. You can use online tools like BestEssaysEducation, SupremeDissertations, or Grammarly for extra proofreading help.
The main goal of this section is to make the exchange of goods easier and avoid repeated quality inspections. If you list all the quality requirements in this section, the document will oblige the supplier to observe them.
4. Include International and State Laws
Just as any document that defines the relationship between two businesses, the supply management plan should list legal provisions that regulate this relationship.
Legal documents defined in this section can include but are not limited to:
- Intellectual Property Rights
- Laws that regulate environmental factors, like the Restriction of Hazardous Substances (RoHS) and Waste from the Electrical and Electronic Equipment (WEE)
- General state laws created by the U.S. Securities and Exchange Commission
In addition, you also need to check your state laws to make sure that your supply chain won’t meet any obstacles on the local level.
5. Outline your Supply Selection
One of the most important parts of your supply management plan that requires your attention to detail is the list of goods you will receive from the supplier. This section will include a table that will describe the essential product details needed for supply chain optimization.
The table with product selection should include:
- information about each product category
- the generic name of each product
- number of products scheduled for delivery within a certain timeline
In this table, you can also include the information about the pricing for each product to make sure that the price is fixed on paper and cannot be changed if both sides don’t agree on it.
A proper supply management plan has a lot of advantages, from higher revenues to an improvement in the overall productivity of your company. However, its biggest advantage is that it standardizes and curates the relationships between you and your supplier.
But, as with any document that regulates business relationships, this one also needs attention to detail. Hopefully, our short guide will help you draft a detail-oriented supply management plan that helps you run your supply chain successfully.
About the author
Kristin Savage nourishes, sparks and empowers using the magic of a word. Along with pursuing her degree in Creative Writing, Kristin was gaining experience in the publishing industry, with expertise in marketing strategy for publishers and authors. Now she works as a contributing writer at TrustMyPaper and GrabMyEssay. You can find her on Facebook.