Simply put, supplier stratification is the process of assigning categories to your supply base in order to more effectively catalog them for a broader purpose. This purpose in most cases will be supplier management of some form, ideally to form a supplier relationship management program within your organization. While each organization should use different criteria to perform this analysis, the step by step process can be similar.
Initially, it’s important to establish why you are stratifying the supply base. Your broader objective will tie to what elements are used in the stratification process. Next, you need to establish how many metrics you will use, best practices indicate at a bare minimum two, the more factors used the more accurate the assessment will be. Keep in mind that some elements of criteria can be derived from other processes, such as supplier performance management practices that are already in place through a scorecarding process. While the information from the scorecard can act as a piece of the puzzle, it should not be the main driver. Other elements like profitability, risk, criticality to the business, distributor model, and overall value driven to the business. It is important to use a mix of quantitative and qualitative values to categorize your suppliers in this process.
The results of the stratification evaluation will provide a path in the course of next steps in developing a proper SRM program by helping to align resources and select the right suppliers based on their qualifications into the program. More to come on in this mini blog series on how to set up a proper SRM program.