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The Essential Consultancy Guide to Supplier Relationship Management (SRM)

Welcome to these pages which provide an introduction to Supplier Relationship Management (SRM); what it comprises, its benefits, and challenges to be met in its use.   I hope the information is useful, but please note these are personal views, and no responsibility is accepted for any use to which this information is put.   Suggestions for expansion of particular topics are welcomed. Thanks  - Bruce Pinnington.

Supplier Relationship Management covers the processes, resources, structures and culture through which customer and supplier organisations control and develop their strategic, commercial and operational relationships (or partnerships) to mutual advantage.

Supplier Relationship Management should be of interest to:

  • (Buyer) Organisations who depend on suppliers for products or services which are significant to their business
  • (Supplier) Organisations who have significant levels of business with buyer organisations, often designated as 'Key Accounts'.  Supplier Relationship Management complements Key Account Management (KAM) by ensuring that sales and marketing activities are supported through the relationship management processes.

Although aimed primarily at outsourced supply, the relationship management approach can also be applied to insourced supplies, particularly with large multi-divisional organisations.

The heading links below, or on the left column, provide further information on the what, why, when and how for SRM.

What is Supplier Relationship Management? Why have SRM - the benefits
SRM is a function which bridges the organisational structures; management and operational processes; controls; and culture and values between two organisations, to ensure that business is developed for mutual benefit.   The SRM function is underpinned by formal contractual or SLA arrangements, and relationship development plans. Particular suppliers may have been selected because of beneficial pricing, high quality or for core competences which may give the organisation competitive advantages.  Dependence on those suppliers may represent consider risk to an organisation, and selection may have been a time consuming expensive process.    Supplier relationship management helps to ensure that interaction between the organisations is as efficient and effective as possible at different levels, and across different functional areas, so that benefits are realised at minimal risk and cost.    This function is equally important to suppliers to ensure that optimal use is made of their products/services, and to ensure that buyer obligations to the supplier are fulfilled.
When is SRM appropriate? How is an SRM approach implemented?
The extent to which a customer-supplier relationship needs managing depends on its size, complexity and risk.  Large scale strategic partnerships require management at several levels to ensure strategic alignment is developed in parallel with operational performance.  At the other end of the scale a lightweight approach is needed to maintain operational performance efficiently.  Different arrangements will be appropriate for insourced vs. outsourced supply.   A small low value relationship may be part time managed by a purchasing manager or by an operations manager.  A strategic relationship may have a small, dedicated, cross-functional team. Profile tools first help to establish the nature of the relationship being managed - every customer supplier relationship is different.  Profiling will establish differences in culture, process or control which need particular attention, and will establish a suitable level of relationship management effort according to the size and importance of the supply. Essential has a generic toolkit available which contains tools to analyse relationships, a customisable process template, and an implementation method which will allow relationships to be managed efficiently and effectively.
 

 

All pages are copyright: 2004, 2005 Essential Consultancy Services Limited

The content of these pages represents the personal views of the author and is provided for information only.  The content does not constitute advice.  The reader shall accept responsibility for all uses to which the information is put.


For help in developing and implementing, or reviewing the effectiveness of supplier management arrangements, please contact us: info@essentialcs.co.uk