Every one of us might be wondering why companies have to spend a lot of resources, including time, money, and manpower, in supplier management activities such as supplier qualification, supplier performance evaluation, supplier development, and phaseout decisions. There's only one answer to this question, which follows:
Supplier management is less costly than the risk of project failure. If suppliers are not able to deliver what they were contracted for, then contracting organizations lose a lot of money implementing risk purchase, and disaster comes as a project loss.
The following terms will help in understanding complete supplier management activities: