Getting supplier relationship management (SRM) right can make all the difference in your company’s success or failure.
The focus must shift from being a deal-based team to more of a relationship management-based approach for a strategic supply chain methodology to work. In sales, this is the equivalent of a prospecting salesman, hitting the phones and hunting down the next deal compared to the role of an experienced account director.
Good SRM prevents the savings made in the buying process from disappearing into a void between the initial contract award and operations management – where the true value of the supply chain proves itself.
When it comes to executing a successful SRM program, three distinct steps – plan, implement, and operate – can make all the difference.
- Resource segmentation
Spend resources and activity on the most important supplier relationships, which stand to benefit the most from continuous improvement of critical performance metrics parameters or KPI’s.
- Prepare for success
Implementation strategies should be thoroughly prepared. Ensure that suppliers have realistic plans for meeting your business objectives and flag where there may be issues. Implementation planning should begin as early as possible, with roles and responsibilities clearly defined for both the supplier and the customer.
- Operational excellence as a goal
Even though everyone loves to talk about innovation and continual improvement (Kaizen anyone?!), the first six to eight months of a new relationship should be devoted to establishing the core services and value standards.
- Measurement leads to management
Establish key performance metrics that identify “what’s significant” for both parties early on. Also, put in place strict measurement methods that cover the most important areas of performance.
- Tools, systems, and techniques
Assemble a standard set of tools and templates for all stakeholders to use to establish a “shared language.” Build collaboration platforms and portals using technology so that both parties have access to a single data repository and improvement planning.
Establish an effective governance framework to ensure that all stakeholders are held responsible for their activities and resolve issues requiring involvement outside the core project team.
- Development of strategic relationships
Once core performance is established, both stakeholders must set a clear plan for developing the relationship’s more strategic aspects, which will benefit both parties and provide a genuine competitive advantage.
- Performer’s platform
Using an SRM platform to track supplier performance is just one side of the story. One of the most significant advantages is the ability to assess the efficacy of processes, which is frequently a source of underperformance. Internal investigations might identify problems that, if resolved, can benefit the client’s whole supply chain.