Three steps to improve Supplier Relationship Management

Getting supplier relationship management (SRM) right can mean the difference between success and failure in your wider supply chain. 

For supplier relationship management (SRM) to work the focus needs to pass from the deal team to the relationship managers. This ensures that the savings don’t drop into the no-man’s land between purchasing and operational management.

Building a supplier relationship management model with three distinct phases – plan, implement and operate – can really make the difference.

1. Plan

• Segment resource

Focus resources and activity on the most business-critical supplier relationships that have the most to gain from continuous improvement of key performance metrics parameters.

• Plan to succeed

Include a rigorous examination of proposed implementation strategies. Ensure that suppliers demonstrate credible plans to provide the best possible start to a new supply line. Start implementation planning early and clearly define roles and responsibilities for the supplier and the customer company.

• Focus on operational excellence

Everyone loves talking about innovation, but ruthlessly focus the first six to eight months of a new relationship on establishing the core service and value levels.

2. Implement

• What gets measured gets managed

Establish early the key performance indicators that define “what’s important” for both parties. And implement rigorous measurement processes that cover the core aspects of performance.

• Tools, processes and systems

Ensure all parties are equipped with a standard set of tools and templates to create a ‘common language’. Use technology to build collaboration platforms and portals, so both parties have access to a single repository of data and improvement planning.

• Governance

Establish an effective governance structure to ensure all parties are held accountable for completing their actions, and to resolve issues that may require input beyond the direct project team.

3. Operate

• Strategic relationship development

Once core performance is stable, both parties need to have a clear agenda to develop the more strategic aspects of the relationship, to benefit both and create real competitive advantage. 

• Platform to perform

Using a SRM programme to measure the performance of the supplier is only half the story. One of the biggest benefits is measuring the effectiveness of internal client processes, which is often a root cause of under-performance. Looking internally can reveal issues that, if fixed, can benefit the client’s wider supply chain.