The Sustainable Development of the Supplier Management Process: a study for an international industrial company

Procurement is based on the management of supplier relations, whose crucial aim is to improve the operations of both parties and strengthen partnerships. Supplier relationship management is a way to comprehensively manage supplier data and increase the value of the supplier relationship by proposing a solution for effective supplier management. The continuous development of supplier relations builds a sustainable business. The study aims to find out the industrial company inactivation process and how the current process should be developed, as well as the risks associated with the supplier evaluation process in commodities and problems with the supplier approval process. The thesis concept is surrounded by supplier relationship management (SRM). It includes supplier classification, selection and evaluation, and supplier base reduction. Spend analysis was briefly mentioned since it is a crucial part of the results. The study was based on the case study method and had both quantitative and qualitative research methods. The research is limited in accordance with the industrial company's wishes to deal only with suppliers’ records from Finnish procurement categories in 2020-2021. This case study collected sources from books, and academic articles to enrich the theoretical part. It also gathered over 300 supplier records from the company's master data and conducted two theme interviews with experienced commodity managers in its case study. The interviews were recorded and gathered data was thoroughly transcribed and analysed. As the first step in the development of supplier management processes, all steps for successful supplier inactivation were described. The most important factors in the development of supplier management processes in an industrial company were the development of the inactivation process to be user-friendly and the determination of work instructions and supplier reduction criteria. Consequently, supplier relationships can be managed, and suppliers can be monitored systematically. Noticeably, the key problems with supplier approval are related to system deficiencies and supplier audits. In addition, supplier audits were found to have a connection with the possible needs for supplier inactivation, for which defining a valid metric is essential. The objectives of the study were achieved. As a result of the thesis process, concrete development measures were listed to support the acceptance and evaluation of suppliers, and the main processes steps of the supplier inactivation process were described. However, the development of supplier management regarding the inactivation process is at the beginning and supplier management should be developed to be even more sustainable