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
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
|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: