Suppliers are companies and individuals that supply various required resources to enterprises and their competitors, including the provision of raw materials, equipment, energy, labor, etc. How their situation will have a huge impact on the company's marketing activities, such as changes in the price of raw materials and shortages will affect the price and delivery time of the company's products, and will thus weaken the long-term cooperation and interests of the company and customers. Must have a comprehensive understanding and thorough analysis of the supplier's situation. Suppliers are both opponents and partners in business negotiations.

The characteristics of suppliers that are in line with the company's strategy should be determined, and all suppliers should be evaluated, and suppliers can be divided into transactional, strategic, and large amount.
Supplier classification is an important part of supplier system management. It determines which suppliers you want to develop strategic partnerships with, which you want to grow your business, which are to maintain the status quo, which are actively eliminated, and which are unidentified. Correspondingly, suppliers can be divided into print labels suppliers, Strategic Suppliers, Preferred Suppliers, Provisional Suppliers, Exit Passive, and Exit Active. And unidentified supplier (Undetermined). Of course, the division and definition of different companies may be slightly different.
Generally speaking, the transaction type refers to a large number of suppliers, but the transaction amount is small;
Strategic suppliers are the few suppliers necessary for the company's strategic development;
Large-value suppliers refer to suppliers with large transaction amounts and general strategic significance. ,
Strategic suppliers are those that are strategic to the company. For example, they provide products with complex technology and long production cycles, and they may be the only suppliers. Their presence is critical to the company's existence. The cost of changing suppliers is very high, some or even impossible. Such suppliers should have a long-term perspective and cultivate long-term relationships.
Products or services provided by preferred suppliers are available from other suppliers, but companies prefer to use preferred suppliers. This is a fundamental difference from strategic suppliers. Preferred suppliers are based on the supplier's overall performance, such as price, quality, delivery, technology, services, asset management, process management, and personnel management. Priority supplier treatment is earned. For example, there are many suppliers who can do machining parts, but the company prefers supplier A, and giving new business to this supplier is based on A's overall performance.
Suppliers usually provide products or services to the company for the first time, and their performance is not understood enough, so they are given a year to inspect. The inspection is completed, either upgrade to a priority supplier or downgraded supplier. Of course, for priority suppliers, if their performance declines in a certain period of time, they can also be adjusted to inspect the suppliers, “stay in school to see,” give them opportunities to improve, and then either upgrade or downgrade.
Negative elimination of suppliers should no longer result in new products. But the company is also not actively removing existing businesses. As the main product completes its life cycle, such suppliers are naturally eliminated. Be sensible with such suppliers. If performance is okay, don't break the balance. From the supplier's perspective, the product is already in production, with little additional investment, and I am happy to continue to support you; from the purchaser's perspective, re-selecting the supplier may be too costly. In this way, both sides recognize that maintaining the status quo is the best. Of course, in some cases, the product may become a "chicken rib", the supplier is not very profitable (or unwilling to continue to supply), and the purchaser is unwilling to requalify the new supplier. Then, the strength of the supplier is relatively greater, the product is not given enough attention, and the performance may not be ideal. This is definitely a challenge for buyers. Maintaining a relatively good relationship is even more important.
Actively phasing out suppliers not only fails to get new business, but also removes existing business. This is the most extreme example of supplier management. For such suppliers, we must prevent the situation of "fish dead net breaking". Because once the supplier knows that its existing business is going to be removed, it is possible to take extreme measures, either raising prices, discontinuing supply, or performing poorly. So before pulling the trigger, make sure your other supply channel is open. The identity of the supplier has not been determined. After analysis and evaluation, either upgrade to inspect suppliers or define as passive elimination or active elimination of suppliers. Another purpose of supplier classification is to communicate within the company. For example, new businesses are given to strategic or priority suppliers, and then consideration of supplier inspections must not be given to eliminating suppliers. These should be written policies and communicated to various departments within the company. Of course, other departments should be consulted when sorting suppliers. But once decided, the entire company should execute. Another example is a company that should use a vendor on the Approved Vendor List (AVL). The supplier list should be based on the supplier classification system. Of course, as a supplier management department, we must ensure that all types of suppliers can meet the company's expectations.