SRM – Get the basics right – start with clear communication

Supplier Relationship Management is a complex undertaking. To do it right you need to stratify your suppliers, establish a governance structure and organise your teams, design a programme to foster supplier development, and implement performance metrics and service level agreements.

This kind of project involves buy-in and cooperation from numerous stakeholders, time, money and re-deployment or hiring of new staff.

So, what we’re saying is, don’t be too hard on yourself if haven’t managed to get this far. In our experience most organisations haven’t and for most of your suppliers, you’ll never need to.

However, one thing you should be asking yourself is – can I communicate effectively with my suppliers?

Without a doubt, this is the root of 90% of the problems that will come up in the course of any relationship you have with a supplier (or anybody for that matter).

Also, good communication is something you should be practicing with every supplier, not just a select few that would form the basis of a usual SRM process.

We would argue that clarity is the key to effective communication. This is especially true in when dealing with your Suppliers and when they are dealing you, their customer.

Take this common scenario:

Supplier receives a one line email from someone in your company saying “Hey, widget x missing”. This lands in some generic shared mailbox. Two weeks go by and nothing happens. The project has shut down because “widget x” is still missing. Supplier A’s Key Account Manager is hauled in to explain themselves. The first thing they’ll probably say is that they didn’t even know about the issue and they’ll get straight on it. But it’s too late now. Everyone is one the defensive, cagey, and looking to either point fingers or save face. Another relationship damaged over nothing. They think you are unreasonable and you think they’re unorganised. This all could have been avoided through clear communication.

So what amounts to clear communication when dealing with a Supplier?

Here’s what we think you should be telling them:Take this common scenario: Supplier receives a one line email from someone in your company saying “Hey, widget x missing”.

This lands in some generic shared mailbox. Two weeks go by and nothing happens. The project has shut down because “widget x” is still missing. Supplier A’s Key Account Manager is hauled in to explain themselves.

The first thing they’ll probably say is that they didn’t even know about the issue and they’ll get straight on it. But it’s too late now. Everyone is one the defensive, cagey, and looking to either point fingers or save face. Another relationship damaged over nothing. They think you are unreasonable and you think they’re unorganised. This all could have been avoided through clear communication.

• What do they need to do – write it down clearly
• When it need to be done by – give them a date and time
• How important is it and what is the priority – try to be realistic

But that’s just step one. The next place lots of people fall down is the follow-up when the Supplier gives you an answer. If they don’t hear otherwise, they will more than likely assume everything is OK and move on with their lives. Don’t allow things to fester or go unresolved.

With that in mind:

• Be clear that you are happy or unhappy with the Supplier’s resolution
• If you aren’t happy make the supplier respond and repeat until a resolution is reached.

These are all obvious suggestions when you give them more than a few minutes thought, but this basic lack of communication causes endless issues in businesses day to day interaction with Suppliers. The main cause of this is a lack of structure and consistency. People a sending poorly worded emails back and forth to different points of contact. Nobody has clear visibility of all the outstanding issues. People go missing and can’t pick up where another left off. In a nutshell, lack of clarity again.

SourceDogg’s SRM module helps you get a structure in place to eliminate this issue. This is how we do it:

• All communication on Key Actions or Issues is stored in one place and is visible to the Supplier and Buyer. A team can be created on both sides with access to this information.

• Each Key Action must have a description (with supporting documents if required), a deadline date, and a priority. The Supplier knows what has to be done, when it has to be done by, and how big a deal it is.

• Suppliers have to describe what they did to close out the issue or action and submit his for review.

• Buyers have to either say they are happy (mark as complete) or not (reject) and send back to the supplier. This process repeats until the action is complete or the issue is resolved.

No confusion and no ambiguity. Everyone can see what’s done, what needs to be done, when it needs to be done by, and who is responsible. Get this bit right and you can begin to build productive and long-lasting supplier relationships.

If you like to take a look at SourceDogg’s SRM tool please contact our team on 0203 481 0904 or speak to your Account Manager (maybe even send them an Action on SRM ?).