Why I stopped following tradition and adopted SRM

Julian Hackett
posted by Julian Hackett
7 January 2016

For as long as I have been in procurement (more years than I like to remember) I have always followed the trend to keep suppliers at arms length, offer minimal information when requesting quotations, along with offering a limited turnaround time for getting the requested information back in front of me to assist with the decision of who to buy from.

After making our decision we then tell the unsuccessful vendors nothing. The only time feedback is given is when they call us two or three months later to see if a decision has been made as they need to enter the information on their customer quotes system. Does this sound familiar?

This way of working is not beneficial to either party and I believe supplier relationship management is the way forward. It is essential there is more focus on the supply chain within any business, if we are to improve our relationships with our suppliers to make sure we get the best value, quality and service from each relationship.

Initially we must look at the strategic sourcing approach of our business to see which supplier disciplines fit in with our own business models. Many companies are now embracing category management, which helps with the focus required on the product groups. But we must ensure that the relationship with our suppliers is healthy and honest with plenty of communication. It is important to get to know the suppliers' capabilities and production processes. A sourcing strategy can then be developed to encourage collaboration, this may help to cultivate a leaner and more developed supply structure.

Establishing a supply chain structure with accredited suppliers signed to service level agreements will help when any business is tendering to win work and an expedient response is required. Working within a partnership and armed with a good knowledge of your supplier base and who you will work with will help to cut down the time and effort involved in operating an invitation to tender process. The use of three or four accredited suppliers, linked to the business on a framework agreement, will cut out a lot of heartache in getting an acceptable price before your company's submission to its client.

Post-contract award debriefs for unsuccessful vendors are extremely important too, as this is your opportunity to help the unsuccessful suppliers realise where they have gone wrong with their bid and encourage them to submit a more competitive response on the next occasion. If we keep ignoring suppliers after multiple unsuccessful bids with no feedback then their interest in us will wither and die. To keep a healthy supply chain managing the unsuccessful suppliers is equally important as managing the successful ones.

For suppliers winning the work, rigorous but achievable, KPIs must now be managed to encourage successful completion of the contract and continuous improvement. Meetings every three or six months, to discuss the way in which the supplier is performing or has performed should be encouraged. This forum also gives the key stakeholders within the company their opportunity to discuss any good or bad points. As procurement professionals we are all used to internal customers making complaints and the regular meetings can be used as an opportunity to improve the systems and processes we have in place. Also remember that if a supplier has carried out their work well then it costs nothing to say thank you.

Obviously there is a cost associated with managing any supplier base, so it is important to work with them and not just remove them from the approved list if things don’t go to plan. A process must be followed to discuss and complaints along with the opportunity to put things right before being removed from the list.

We must also encourage the introduction of any innovation or products the suppliers has, as it is far to easy to sit back and relax and carry on doing things the same way because “we’ve always done it like this!”.

Procurement must be continuously improving and we can only do this by engaging with our suppliers. Planning and preparation will make supplier relationship management easier and enhance the service offered by your business to its own clients. Map out your path to achieve the end goal.

• This is where we are now
• This is where we want to go
• This is how we will get there

Collaborating with the supplier as a partner instead of the more traditional buyer-supplier relationship will ensure a good partnership and ensure suppliers will see your company as a customer they want to deal with.

Julian Hackett is local procurement lead UK & Ireland at Emerson Process Management

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