Supplier Management

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ITIL Supplier Management: Overview

Process Objective: To ensure that all contracts with suppliers support the needs of the business, and that all suppliers meet their contractual commitments.

Part of: Service Design

Process Owner: Supplier Manager

ITIL Supplier Management: Process Definition

ITIL Supplier Management

Supplier Management was covered within ICT Infrastructure Management in ITIL V2. In ITIL V3, Supplier Management is part of the Service Design process to allow for a better integration into the Service Lifecycle.

The following sub-processes are part of ITIL Supplier Management:

Sub-Processes

Providing the Supplier Management Framework

Process Objective: To provide guidance and standards for the procurement of services and products. This includes the provision of the Supplier Strategy and the preparation of Standard Terms and Conditions.

Evaluation of New Suppliers and Contracts

Process Objective: To evaluate prospective suppliers in accordance with the Supplier Strategy, and to select the most suitable supplier.

Establishing New Suppliers and Contracts

Process Objective: To negotiate and sign a binding contract with a supplier. This process is mainly applied for significant investments, either in externally provided services or in technology.

Processing of Standard Orders

Process Objective: To process orders for commodity products and services, and to order pre-defined items within the boundaries of existing contract frameworks.

Supplier and Contract Review

Process Objective: To verify if the contractually agreed performance is actually delivered, and to define improvement measures if required (see "Supplier and Contract Review")

Contract Renewal or Termination

Process Objective: To carry out regular renewals of contracts, to assess if those contracts are still relevant, and to terminate contracts which are no longer needed.

Downloads

Use the following links to open the process overview of Supplier Management showing the most important interfaces:

• ITIL Supplier Management (.JPG)
• ITIL Supplier Management (.PDF)

ITIL Terms: Supplier Management

Purchase Order

An order for purchasing items from a supplier. If the order is for an externally supplied Supporting Service it is accompanied by an Underpinning Contract defining service level targets.

Purchase Request

A request to purchase a service or a product from an external supplier, issued for example from Release Management during Service Build. Processing of a Purchase Request will generally proceed only if the requester also holds an approved budget for the purchase.

Required Modifications to UCs

A request from a Service Management process to change an Underpinning Contract. This request is most often sent from Service Level Management to Supplier Management if a new service requires a new or modified external Supporting Service.

Standard Terms and Conditions

A set of terms and conditions which are routinely attached to contracts and orders when procuring services or products.

Supplier and Contract Database (SCD)

A database or structured document used to manage supplier contracts throughout their lifecycle. The SCD contains key attributes of all contracts and suppliers, and should be part of the Service Knowledge Management System.

Supplier and Contract Review

The Supplier and Contract Review documents achieved vs. agreed supplier performance. It also contains any identified supplier weaknesses and problems, as well as suggestions on how the situation could be improved.

Supplier Evaluation

The resulting document from the Supplier Evaluation process, describing in detail the criteria used for evaluating and selecting a suitable supplier.

Supplier Strategy

The Supplier Strategy sets guidelines for the procurement of services and goods. It typically includes criteria for the selection of suitable suppliers and a list of preferred suppliers.

Underpinning Contract (UC)

A contract between an IT service provider and a third party. The third party provides services that support the delivery of a service to a customer. The Underpinning Contract defines targets and responsibilities that are required to meet agreed Service Level targets in an SLA (see also: ITIL Checklist SLA - OLA - UC).

Additional Information on Supplier Management

ITIL KPIs

• Key Performance Indicators (KPIs) Supplier Management

ITIL Roles in Supplier Management

Supplier Manager - Process Owner

The Supplier Manager is responsible for ensuring that value for money is obtained from all suppliers.

He makes sure that contracts with suppliers support the needs of the business, and that all suppliers meet their contractual commitments.

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