What is Supplier Quality and Contract Management?

Supplier Quality Management (SQM) is a system used to ensure that suppliers provide goods and services that meet defined quality standards. Supplier Contract Management, on the other hand, is the process through which procurement professionals create, update, and monitor agreements with their suppliers.
In this blog post, you’ll find detailed insights into both supplier quality management and contract management.

What is Supplier Quality Management?

Supplier quality management is a process that helps businesses improve supply chain quality, enhance customer satisfaction, and reduce costs. Its aim is to enable companies to achieve the highest quality at the lowest possible cost.
With a proper quality management process, any potential issues can be detected early and corrected when necessary.

What Should a Supplier Management Process Look Like?

The supplier management process covers how a company selects its suppliers, establishes agreements, monitors relationships, and audits based on certain standards.
In essence, it acts as a filter to ensure everything that enters from the outside adds value, not risk.
The stronger your supply chain, the more robust your brand reputation becomes. To secure each link in that chain, an effective Supplier Management Process (SMP) is essential.

There are four key steps in the supplier management process:

Selecting the Right Supplier
The right supplier offers competitive prices, delivers on time, provides quality products or services, and stands out with reliability.
For instance, suppose you’re a food manufacturer—you wouldn’t choose a packaging supplier solely for its price. You’d also evaluate whether the packaging material is safe for food contact.
Contract Management
Verbal agreements are not enough. To ensure your needs are met, detailed contracts must be prepared, including expectations around quality, confidentiality clauses, and more.
Performance Monitoring and Reporting
It’s essential to regularly track whether suppliers fulfill their contractual obligations.
Compliance
Suppliers must comply with international laws and regulations. For a food brand, for example, adherence to hygiene regulations is non-negotiable.

What is Supplier Contract Management?

Supplier contract management covers the entire lifecycle of agreements made with suppliers and ensures they are executed in a structured and controlled way.
Its purpose is to guarantee sustainability, cost efficiency, and performance alignment in supplier relationships.

Contrary to popular belief, a supplier contract is not just a document to be signed and filed. It should answer key questions such as:

Is the supplier meeting their obligations?
Is their performance aligned with expectations?
How will the contract be revised when necessary?

For example:
Imagine you initially agreed with a raw material supplier to deliver once a year. As production volume increases, you may need deliveries every three months. This would require revisiting and updating the contract.

This shows that supplier contracts are dynamic, living documents that must be regularly reviewed, evaluated, and, if necessary, revised.

What Should the Supplier Contract Management Process Look Like?

Seeing supplier contracts as mere paperwork means missing the bigger picture.
A solid contract management process is not just about signatures—it’s a strategic structure built on data-driven decisions and focused on minimizing risk.

This process is often referred to as Contract Lifecycle Management (CLM) and includes all stages from initial drafting to the latest updates. The typical phases are:

Drafting: Contract terms are clarified based on needs.
Negotiation: Parties express their expectations and reach mutual agreement.
Approval: Relevant departments or managers review the contract.
Signing: The official process begins.
Implementation: Contractual terms are put into action.
Monitoring & Renewal: Performance and compliance are regularly evaluated and updated if needed.

How Can You Easily Manage Supplier Quality and Contract Documents?

JetSRM’s “Supplier Quality and Contract Management Module” allows you to manage supplier quality documents and performance evaluation processes in a centralized, systematic, and organized way.

Searching for supplier documents in email folders, manually tracking expiration dates on calendars, or managing evaluations in Excel sheets—these are outdated methods.
If you’re looking for a more efficient, risk-free, and well-organized process, the solution is clear:
Create a supplier quality and contract management system with a customizable portal that fits your needs. JetSRM offers the best response to this need.

Seamlessly track and manage quality and contract documents within your SAP ERP system.
Analyze supplier performance evaluations.
Securely store certifications, analysis reports, and quality documents. The platform also automatically monitors expiration dates.
For example, if an ISO 9001 certificate is about to expire, the system will notify you and the supplier in advance—helping you avoid risks related to outdated documents.

For more details, you can visit our “JetSRM: Supplier Quality and Contract Management Module” page and explore our other modules as well.
Feel free to contact us for further information.