Supplier relationship management (SRM) is undergoing a major transition. Gone are the days where simply managing spend and finding the best deal possible within your supply base is enough – or easy.
In today’s global economy there are so many factors to consider when choosing and managing a supplier, that it can quickly become overwhelming. Thankfully, there’s new technology out there that helps to automate and simplify the process, making it easy for you to make fast, informed decisions about your suppliers. And the results are impressive: companies focused on SRM lead their peers five to one in terms of value derived from their supply base.
Here are five secrets about SRM you need to know now to start cultivating meaningful supplier relationships:
1. The focus is on the relationship. In today’s world, managing the supply base is about strengthening relationships that can make or break your business. Earning your suppliers’ trust with honest communication, listening to their concerns and involving them in your processes ultimately makes them a vested partner in your business.
2. Expectations are changing. Procurement is expected to know where they are vulnerable and bolster their teams for success. Teams that put a greater emphasis on qualitative and quantitative supplier data analysis will be able to quickly and succinctly identify weak spots, risks and opportunities in the global supply chain - improving the strategies and plans needed to manage the suppliers, and ultimately both businesses, for continued success.
3. It’s mutually beneficial. If you are aligned with your suppliers and treat them as partners, both businesses will experience higher success rates, decreased risks and enhanced collaboration and innovation. Studies have found the top procurement teams that have successfully aligned with their key suppliers have improved supplier capabilities of innovation, quality, reliability and costs/price reductions and agility to reduce risk factors. Greater value can be achieved for both businesses, something that would be difficult to achieve if operating independently.
4. It delivers big opportunities. Successful SRM yields a faster time to market, transactional efficiency, competitiveness, risk management, and large financial gains - all of which not only contribute to your bottom line, but also allow you to deliver a quality and cutting edge product, putting you ahead of the market.
5. Technology can simplify the process. The key to effective SRM is having a system in place that makes it easy to view your suppliers and analyze all of the risk factors. Using SRM technology provides you with full and unparalleled visibility into your supplier base, giving you a detailed picture of what is impacting your supply chain and making it easy to mitigate the risk.
Effective SRM can not only deliver big savings, but big opportunities. How are you developing lasting relationships with your suppliers?
☛ Mickey North Rizza is VP strategic services at BravoSolution.