A recent article in Purchasing entitled Supplier Relationship Management: Pathways to Convergence offered up a few tips on Supplier Relationship Management, complete with case studies, that could be useful. The article, which notes that, At the heart of any good supplier-relationship management (SRM) process is a belief in exacting metrics, open communication and a laser-like focus on finding and nurturing suppliers who are willing and able to bring new technologies and other innovations that have a positive impact on the bottom line of both companies.
Tell Suppliers What You Expect : Pitney Bowes
“We’re like any technology company in recognizing that our suppliers and partners will play an increasingly more critical role in our business strategies,” says Michael Dempsey, Vice President of Global Direct Procurement.”SRM provides the enabling mechanism for selecting, developing and leveraging the supplier capabilities we need to deliver superior customer value today and, more important, tomorrow. It’s vital to our success.”
Pitney Bowes segments its supply base, forms relationships with the top level of management in the top 5% of its supply base, and holds formal periodic business reviews. This feedback allows Pitney Bowes and its suppliers to work together towards one common goal.
Suppliers must ‘enhance’ customers’ experience : Fedex Express
Fedex Express in Memphis, Tenn. “depends on our suppliers to provide products, services or solutions to us that enhance our customers’ experience,” says Mary H. McDaniel, Vice President of Material and Corporate Sourcing. “Our customers depend on us to perform for them. We depend on our suppliers to perform for us.”
At Fedex, SRM is built into their four-step strategic sourcing process (assess, validate, source, manage), requirements are communicated to suppliers through Aeroxchange, and scorecards are used to track supplier performance. The results of the scorecard are used to develop action plans which are reviewed with suppliers during semi-annual meetings. In addition, the company holds a global supplier symposium every other year for its top 50 suppliers.
Suppliers should understand end customers’ needs Procter & Gamble
P&G uses a rigorous SRM methodology. “It starts with purchasing leadership involvement in relationships with strategic suppliers, and is focused on creating joint value for suppliers and our business,” says Mary E. Kostolansky, Director of Marketing Purchases at Procter & Gamble in Cincinnati. Furthermore, she states that “Our suppliers are an integral part of how we do business and we take a long-term view of these relationships to drive sustained results,” says Kostolansky. “We believe our suppliers can be a critical component in our ability to innovate and deliver sustainable value.”
P&G spends more time than ever ensuring suppliers understand retailer and end consumer needs and involves representatives of R&D, marketing, engineering, and other functions in the SRM process. Furthermore, P&G focusses on growing its business with top suppliers and on eliminating poor performers that are not adding value.
All-in-all, a good article on the basics. So heed the advice and don’t be in the 51% of Companies that Don’t Understand Risk.