All firms and organizations are dependent on and involve suppliers for the provision of various goods and services in order to take full advantage of the performance of the business. Suppliers are very important for any business, and handling them is vital. Effective supplier management system ensures the occurrence of various activities which are mentioned below:

• Devising policies to administer suppliers;
• Discussing legal contracts between the acquiring organizations and its suppliers;
• Suppliers yield goods and services in tandem as per the expectations agreed upon;
• Contracts with suppliers should be in such a way that it should match the requirements of the business;
• Targets set in the contracts with suppliers should be in line with the targets fixed by the procuring organization;
• Management of effective relationships with suppliers and their overall performance
• Management of supplier performance and maintainingtheir precise records and information
• Organizations that define the supplier management system as per the set goals get high-quality products and services from their suppliers within the stipulated time frame.

The organization works in association with suppliers to enhance the overall performance. The organization is also able to handle risks associated with suppliersdue to these aspects of supplier management. The organizations, in one way, can limit their vulnerability to the risks that are often relatedto suppliers through the supplier management system.