It is time to start embracing supplier relationship management (SRM). There are a number of general principles that are useful to understanding, promoting and implementing good SRM in business. With some listed below, these tools represent a checklist on what may be possible between the specific business, supply chain and key relationships players that are required to manage these relationships.
SRM is the systematic creation and capture of post-contract value from supplier relationships. It recognizes that relationships are an evolving notion. By creating win-win situations for the buyer and seller you can see measurable outcomes in terms of their value.
Collaboration is key with strategic suppliers, but like all relationships it’s not all smooth sailing. Businesses must be able to be flexible in the application of SRM. SRM needs to be completely integrated with the likes of strategic sourcing and category management processes. A detailed analysis of the specific supplier relationship is also required before a strategy can be actioned and there is no one size fits all solution. Here are five general principles to consider.
Strengthening supplier relationships
Relationships are the pivotal focus. Managing the supply chain in today’s world is about strengthening core relationships that can either make or break your business. Using trust and honest communication is a recipe to earning good SRM. Listening to each others concerns reciprocally and involving each other in your processes ultimately enables them to be an invested partner in your business.
Extracting value from data
The reality is that expectations are changing in SRM. Businesses that put effort in to understanding qualitative and quantitative data through analysis will be better able to quickly identify weakness, risks, opportunities and strengths in the holistic supply chain. Procurement is knowing where the value is and encouraging teams for success. By improving the strategies in place and implementing plans needed to manage the suppliers, a win-win equilibrium for mutual continued success will be attained.
Mutually beneficial relationships
SRM should be mutually beneficial. Good SRM will create partnerships that directly align business efforts together. This collaboration will experience higher success rates, decrease risks and enhance innovation. Some studies suggest that the top procurement teams that have successfully aligned their efforts with key suppliers have improved supplier capabilities in terms of innovations, quality, reliability and cost reductions, as well as the ability to reduce risk factors. This added value can be achieved for both parties in the relationship, and achieving it alone would prove difficult.
The scope for opportunities are endless. Good SRM yields advantages like faster entry to market and competitive advantages also arise as it creates efficiencies in regards to risk management, ultimately helping businesses reap large financial gains. Not only does this impact your profits, it also allows your business to deliver a quality cutting-edge product that your business deserves.
Invest in SRM technology
Keep it simplified by the use of technology. Technology allows you to simplify the process of good SRM. By having an effective system in place it makes it easier to view your suppliers information and analyzing the risk factors is a huge advantage. Using good SRM technology enables a business to have leading visibility into your supplier base, giving you a detailed picture of the effects of variables within your supply chain, enabling your business to mitigate risk as well as take advantage of opportunities.