Daily Archives: August 16, 2009

A Brief Review of Supplier Relationship Management Basics

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A recent article over on SupplyManagement.com on 6 steps to better SRM provides a good review of the basics. Even though times are tough, chances are, they are tougher for your supplier which makes good relationships even more important. First of all, you want to be the customer of choice because your supplier likely has less staff to service their customers. Secondly, you want to be the first to know if any of your strategic suppliers are in danger of going under, so you have a chance to either bail them out or find other suppliers before you run into inventory problems. Finally, like all recessions that have come before, this recession will end, demands will rise, raw material shortages will occur, production capacities will be hit, and you definitely want to be the customer of choice next time this happens.

So, how do you start? The SupplyManagement.com article recommends these basic steps:

  • Segment the Supply Base
    You need to know which suppliers are tactical and which are strategic because you focus your efforts on your strategic suppliers.
  • Secure Executive Sponsorship
    C-level executives must be engaged in the management of the most critical strategic suppliers and be behind your SRM initiatives 100%.
  • Embed Processes and Governance
    Processes, roles, and responsibilities need to be documented, readily accessible, followed, and kept up-to-date so they can be continued in a repeatable manner if a key relationship manager leaves or if you start working with a new strategic supplier.
  • Use Technology Effectively
    Technology is the great enabler for Supply Management. Use it! Need help finding a vendor? Check the vendor post index and the company directory on the resource site.
  • Enhance Your People
    Train, train, and train … in what other profession can training deliver 10X, 50X, and even 100X returns when your supply managers find ways to take 10% off of multi-million dollar purchases either through better terms or by working with your suppliers to take cost out of the process?
  • Measure the Benefits
    Demonstrate the results, and use this leverage to keep your technology and training up to date and to get more bodies approved to allow you to enhance your relationships and roll the SRM initiative, which will start with a core group of your most strategic suppliers, to more suppliers over time.