What are the benefits for organizations that successfully implement supplier relationship management?
Supplier Relationship Management (SRM) is an important approach used for engaging with supplier on a level that reflects the priorities of the customer organisation and how best these needs can be achieved. Show
SRM is an integrated approach, addressing both the buyer and seller sides, which can provide mutual benefits for both organization. True SRM cannot be achieved through the Procurement Function acting alone. SRM uses processes, principles, communications and tools to help companies better manage their existing suppliers within all areas of the company during the entire supplier lifecycle. The diagram above shows the move from a Transactional to a Relationship Management
Types of Values Achieved with SRMSupplier relationship management is a long-game strategy, which can deliver benefits as it is implemented. Organizations that practise and focus on enhancing supplier relations can expect the following results: 1. Increased Efficiency Suppliers apprehend and adapt to the needs more quickly which will eliminate redundancy throughout the streamlined process. 2. Revenue Growth 3. Cost Savings Better relationships and increased interaction will lead to less incidents or issues of poor performance, which in turn lead to lower costs for managing the relationship and reduced costs through failures. Also, vendors are more confident and willing to share cost efficiencies gained through the adoption of new technologies or methodologies which mutually beneficial cost advantage from both operational and unit cost perspective. 4. Continual Improvement This can be achieved through product development, development of new processes and procedures and through developing KPI’s and SLA’s over the course of the contract. By taking an active approach to ensuring that contractual performance is met, buyers can ensure that suppliers continue to improve in the ways which provide the most substantial improvement to the customer organisation’s products and services. 5. Preferred Buyer Status Even if the new supplier may provide lower cost, the long-term relationships built with strategic partners generates more value over the short-term gains. By maintaining supplier relationships, buyer can establish a clearer cost base and provide total price visibility. The Challenges of Implementing SRMEven with all the potential values gain with supplier relationship management program, there is still quite many companies are not implementing SRM. This is because moving a company to play a more strategic role in managing suppliers requires change management and a shift in perspective both internally and on the part of supplier. SRM program must be supported by the entire organization on both side. As companies downsize and resources tighten, many employees do not have the time to handle more responsibility or attend time-consuming meeting. Furthermore, many departments believe that they are already managing their suppliers well enough that implementing new program is not required. Key Factors for Developing Reliable Relationship with Suppliers1. Communications Transparency in each other’s’ operations also helps to build trust and understanding in the partnership. 2. A Solid Agreement 3. A Supplier Relationship Management Program Determine the supplier relationship management goals which is measurable and achievable within time frame, list our activities and process to attain goals and establish roles Diagram above shows the Supplier Scorecard with Performance Metrics.4. Performance Management While lower levels are much more involved in tactical operations and may interface with suppliers on a daily or weekly basis as appropriate to manage business, executives may only meet quarterly to discuss strategy. Obtaining inputs from different management level, an SRM program can work successfully on a day-to-day basis while continuing to evolve and address the long-term goals of both parties. 5. Training As large-scale SRM programs require management at different level to anticipate, every employee involved must be trained on how to use tools to ensure successful program execution. Before SRM is even rolled out, the employees should understand their role and obligations to the program for the greatest level of success. ConclusionSupplier Relationship Management provides ensure consistent way of interacting and managing suppliers which promotes collaboration and continuous improvement. A strategic SRM program can eliminates supply chain risk, improved supplier services and support, and even increased organisation revenue growth. References: http://www.sourceoneinc.com/downloads/SRM-Insights-Report.pdf http://www.nrs-international.com/wp-content/uploads/2015/08/SRM.jpg https://www.procurementleaders.com/AcuCustom/Sitename/DAM/052/sample-strategy-guide-SRM-0613_1.pdf http://www.supplychainbrain.com/content/research-analysis/apqc/single-article-page/article/ten-steps-to-designing-an-effective-supplier-relationship-management-program/ What are the benefits of supplier relationship management?The Benefits of Supplier Relationship Management. Reduced costs. ... . Increased efficiency. ... . Minimises price volatility. ... . Consolidation of the supply chain. ... . Outsourcing certain activities. ... . Continual improvement of operations.. What are the benefits of building relationships with suppliers?Benefits of a Good Supplier Relationship. Cost reductions. ... . Increased efficiency. ... . Lower risk of price volatility. ... . Streamlining your purchasing process. ... . Opportunity to outsource tasks. ... . Product and process improvement.. Why supplier relationship process is important for the organization?Supplier relationship management is important because a long-term relationship between your organization and its suppliers allows for the free flow of feedback and ideas. Over time, this will create a more streamlined, effective supply chain that will have a positive impact on costs and customer service.
What are the benefits of a strong customer relationships with the supplier?The key advantage of strong, healthy supplier relationships is that you can gain better value for your business. The better you know your suppliers, and the better they know you, the more likely you are to benefit from dedicated service, preferential pricing and special terms.
|