IACCM states that Supplier Relationship Management (SRM) is a discipline that brings together three key component parts:
- The management of supplier interactions
- Contract management
- Operational management, for example procurement, fulfilment and quality management
Effective Supplier Relationship Management seeks to develop successful, collaborative relationships with key suppliers for the delivery of significant tangible business benefits for both parties. SRM is about maximizing opportunities for value for the client and their key suppliers by means of highly effective relationships. According to research, better supplier relations translates into better bottom line profitability. Therefore, there is a persuasive business case for investing in SRM.
We have many years’ experience in managing SRM improvement programmes. Our process enables us to facilitate and manage a Supplier Relation Management improvement process, across the supply chain. Our methodology includes facilitated workshops, between the client and their major strategic suppliers and the use especially developed on line diagnostic tools, training days and robust KPI metrics.
The purpose of these regular reviews and workshops is to measure and continuously improve the overall performance of the supplier, for the mutual benefit of both organisations and the ultimately the end customer.
The suppliers and their contracts are classified in terms of risk and value, whereby those deemed to be strategic are the priority focus of the improvement process.
There is today a recognition that whilst the “hard” metrics (price, quality etc) are vital to success and can be measured objectively, these need to be complemented by relational metrics. The key one being Supplier Relationship Management (SRM). These intangible factors are often fundamental to commercial success. In the famous Chrysler case, they would have earned an extra $24b if their supplier relations had been more effective.
To secure this benefit, we start by making use of our unique SRM audit tool that measures and defines the current “quality” of the relationship. We have also developed a set of robust and overarching KPI designed to break down to the individual elements to measure performance in terms of responsiveness, innovation, flexibility, cost control etc. This model utilises a series of key statements. The use of key statements and scoring enables the joint client and supplier teams to compare their evaluations and identify the gaps between desired and actual performance of the contract and to use the insights to take practical steps to close the gap and thus improve the outcomes and the relationship. These events are facilitated by our experienced experts and the results analysed and shared with key stakeholders. We also make use of other tools and techniques like the 10c web application.
These workshops are attended by both client and supplier’s representatives to address these issues. We make use of a range of techniques such as force field analysis, Belbin, fish bone, input/output models and other tools and templates to analyse the issues and come up with joint and sustainable solutions.
The overall outcomes are well documented improvements in the Supplier Relationship dynamic which leads to:
- Improve relationships
- Encourage sustainability
- Improved flexibility
- Improve profitability
- Improved responsiveness and agility
- Improved service, compliance, and cost management
- Improved sources of innovation
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