Not all suppliers are created equal. Today, retailers have the opportunity to engage with different suppliers to achieve different operational objectives – reduce the cost of working together, business building, learning, etc. Strategic Supplier Management represents the opportunity for retailers to prioritize, engage, and coordinate business planning activities with and among Suppliers. The outcomes are an overall, unified plan for selecting and managing suppliers as well as individual, collaborative business plans to capture specific retailer/supplier opportunities. The benefits are significantly greater efficiency and lower costs along the value chain and more innovative and effective sales building initiatives.

The key elements in a Strategic Supplier Management approach include: a sophisticated and customized segmentation model to identify those strategic suppliers that can provide unique leverage and learning; creation of the appropriate value chain standards to apply to suppliers; a performance measurement system that reflects the different opportunities among individual suppliers and across the supplier segments; and a planning process to make Strategic Supplier Management come alive.