Don't like SRM? Try 'active supplier collaboration'

2 March 2012

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2 March 2012 | Angeline Albert

The term supplier relationship management sends out the wrong message to suppliers and would be better described as “active supplier collaboration,” according to a senior purchaser.

“The label SRM requires a re-think because it does not send the right message”, Niels Neergaard, director of offshore category management at A.P. Møller–Maersk told SM at the E&P Procurement & Supply Forum in London yesterday.

“There are so many different interpretations of what SRM is, even in this room of professionals and different levels of engagement. I don’t like the word SRM, because I think it sends the wrong message to suppliers,” he added. “It is not simply a question of procurement managing suppliers. Working with suppliers is a more collaborative effort.”

Neergaard said at Maersk they use the phrase ‘active supplier collaboration’ (ASC), which he believes sets the right tone. The organisation has a central sourcing team of five and about 100 procurement professionals and Neergaard was keen to stress real ASC is not something that can be achieved from quarterly dates with suppliers over dinner.

Seven years ago, the procurement function engaged in a collaborative project with suppliers that led to engines being developed which could reduce the level of bunk oil [a type of fuel] in container vessels. Neergaard described this as an innovative outcome that came from good collaboration and communication with suppliers.

He stressed the importance of ensuring the objectives of the buying organisation and suppliers meet each other’s needs. “SRM is not even the sole responsibility of procurement,” he said. “It must be a cross-functional objective.

“I’ve found the forum’s discussions about category management and SRM very interesting, and I would add to them by saying if procurement is to drive real collaboration with suppliers and benefit from innovation, it has to get away from the usual discussions about price,” he said. “The days of beating suppliers over the head on price should be well and truly over.”

 

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