With growing pressures on profit, disruption in the supply chain and ever-changing customer demands, it feels like it’s never been harder to be in the business of supplier management.
But how can you create a better supplier ecosystem for your company so you can drive continual improvement over time, minimise risk through better resilience and support the company’s future strategic growth goals?
We may be biased – but we strongly believe in the power of technology to help deliver these goals.
What is Supplier Relationship and Performance Management?
Supplier relationship management (SRM) is the systematic assessment of suppliers’ strengths and capabilities concerning overall business strategy
It forms the basis of what activities to engage in with different suppliers, and planning and execution of all interactions with suppliers, in a coordinated fashion across the relationship life cycle, to maximize the value realised through those interactions.
The focus of SRM is to develop two-way, mutually beneficial relationships with strategic supply partners. This aims to deliver greater levels of innovation and competitive advantage than could be achieved by operating independently or through a simple transactional purchasing arrangement.
In practice, SRM entails creating closer, more collaborative relationships with key suppliers to uncover and realise new value and reduce the risk of failure.
What are the key activities?
Underpinning disciplines that support effective SRM includes supplier information management, compliance, risk management and performance management.
To make the case for technology being a force for enablement in your organisation, we can break SPM and SRM into five typical tasks.
- Relationship management: This ensures clarity and alignment between organisations where goals, objectives and metrics are shared. It may involve specific action plans and involvement from different departments and hierarchical levels.
- Supplier categorisation: This involves the organisation of the supplier database to facilitate relationships, drive the right level of attention and collaboration as well as monitor spending. This categorisation may also use other scorecard measures such as financial and performance metrics that feed into a risk analysis of the supplier in question.
- Performance management: This activity defines performance targets and includes them in contracts. It can include service level agreements and key performance indicators – or more qualitative feedback loops in regular meetings and reviews.
- Innovation: Supply chain managers operate in the space between the supply chain and the marketplace – listening to customer demands from sales and marketing teams and matching their supply base to ensure futureproofing. This can mean discussions and developments with collaborative strategic supply chain partners or searching for new solutions amongst suppliers that you aren’t currently trading with.
- Contract lifecycle management: The operational management of contracts from creation through to amendments as project and customer demands change, then onto renewals or termination based on performance. The key here is the analytical insight required to drive supply chain strategy.
How can technology help?
You’ve probably already inferred how technology can help your teams deliver across all of the key activities above by enabling them to make better, confident, controlled, considered and data-driven decisions.
We’re confident that by transforming your business digitally, there are 3 levels of benefit to the implementation of technology in the supply chain. These are strategic, tactical and operational.
From a purely operational point of view, technology helps you track performance in real-time against your KPI’s so that you can make small yet vital changes to keep projects and suppliers on course to hit your objectives. Course correcting is essential and flagging challenges quickly, collaboratively and using data means there is less likelihood of brewing emotional conversations a few months down the line.
This could be the ongoing review of deliveries, financial KPI’s or from a subcontractor perspective making sure that they are physically where they need to be and doing what you need them to do to make that GANTT chart go green!
With a little more perspective, tactical changes allow flexibility and agility within your supply chain. With technology, you can use data and insight to identify recurring issues and anomalies which can help facilitate discussions about the upcoming month’s plans. This may form conversations about new projects being awarded to certain suppliers based on this data-driven performance management.
Zooming out a little further, technology empowers your team to make those larger, long-term and impactful calls. The power of data and technology platforms that track performance and manage relationships allows less room for anecdote and more space for supply chain data.
This could impact future contracts, help look at the supply chain more widely and ask those all-important questions regarding how fit for purpose the supplier ecosystem is today vs. where it needs to be in a year – based on trends, customer demands and potential changes in economic, social and governance policies.
Implementing data-based technology platforms to help manage supplier performance and relationship management tasks is becoming an essential process in driving productivity, business growth and competitive advantage.
Technology platforms empower your teams to do their job better across the main five tasks and throughout the hierarchical structure – from operational day to day responsibilities through to tactical and long-term strategic reviews.
It may seem like a big initial hurdle to leap over, but seeing digital transformation as an essential cultural part of the supply chain performance and relationship management journey is vital in 2022. How else will you keep pace with the market and your competitors whilst keeping costs down?
SourceDogg is here to help. Our platform is simple to set up, easy to learn and effortless to use. We’d love to show you how it can help your business achieve its SRM goals.