The goal of supplier relationship management is to streamline and increase the efficiency of interaction between suppliers and the organization. Supplier relationship management usually includes the implementation of technologies, processes, policies, and procedures to support the sourcing and procurement process. These technologies and processes usually focus on improving communication, increasing operational efficiency, and heightening visibility into real-time supply chain operations.

Successful supplier performance management is a continuous cycle of supply and capability assessment, performance monitoring, and improvement identification. It’s all about connection, coordination, checking, control, and cultivation. Suppliers are integrated into an information exchange, buyer requirements are synchronized with supplier capabilities, scorecards are designed and implemented to generate metrics, performance is measured against SLAs, exceptional situations are identified, problems are resolved, and disruptions are minimized.

A Supplier Information Management platform centralizes all supplier information in an organization, allows everyone (with rights) in the buying organization and the supplier organization to access and maintain it in a collaborative fashion, and allows buyers to define initiatives, such as sustainability, based on the information.

Supplier Risk Management is the act of mitigating supplier based-risks, including quality failures, bankruptcies, and supply shortages. It includes production versatility, decision postponement, advanced sourcing strategies, business process management, incentives, price hedging, and forward-thinking contracts.

For a deeper dive into supplier management, supplier relationship management, supplier performance management, supplier information management, and supplier risk management, see the following posts.

• Supplier Enablement
• Strategic Supply Management at Japanese Companies
• Supplier Relationship Management
• Five Types of Supply Risk and How to Mitigate Them
• Purchasing’s Tips for Supplier Relationship Management
• Supply Management in the Decade Ahead VII: Developing and Managing Suppliers
• Foundational Principles of Supplier Performance Management
• Supplier Metrics that Matter
• Getting Started with Supplier Relationship Management
• Downstream Supplier Performance Management

• many companies now spend more than half of their operating costs on direct materials, indirect materials, and services
• customers expect prices to remain flat or drop while product quality and capability increases, even when commodity markets are rising
• investors expect EPS (earnings per share) to continue increasing while prices remain flat (and the salaries of your executives rise)

Strategic sourcing is a multi-step process. The Total Value Management approach defined in the Strategic e-Sourcing Best Practices wiki-paper^* has seven steps:

• Spend Analysis and Opportunity Assessment
  In this phase, sourcing professionals consolidate and analyze spend across the entire organization, categorize the supply base and corresponding spend, enrich the data, develop high level commodity strategies, and then prioritize categories and projects.
• Project Data Collection
  The sourcing team collects price and non-price requirements, including benchmarking statistics, market dynamics, and product/service specifications.
• e-RFX and Supplier Management
  In this phase the project team reviews the data collected in the previous phase and develops a supplier strategy, creates the RFX, and begins the process of supplier management.
• Bid Collection & Negotiation
  The bids are collected, possibly through RFX or e-Auction software.
• Decision Optimization
  In this phase, the sourcing team uses strategic sourcing decision optimization and analytics to analyze the bids against the project requirements and identify an optimal award.
• Award and Contract
  The selected suppliers are notified of the intended award, final negotiations take place, and the contract is signed.
• Post-Bid Management
  Identified savings are not actual savings. In order to insure that savings are realized, the project must be managed to insure all purchases are made in compliance.

For a deeper discussion of the strategic sourcing process, refer to the following blog posts.

• A Strategic Sourcing Plan Outline
• Managing the Purchasing Factory
• Strategic Sourcing Innovation Defined
• Strategic Sourcing and Spend Analysis
• Don’t Wait for the Burning Platform
• Sourcing Lifecycle Management: The Direct Sourcing Cure
• Sourcing Based Product Lifecycle Management
• Advanced Sourcing is Where It’s At
• Don’t Be A Victim of the Performance Gap

^* The e-Sourcing Wiki was created and maintained by Iasta, which was acquired by Selectica in 2014 (which renamed itself Determine in 2015). It was retired by Determine (which did not actively maintain it) before Determine was acquired by Corcentric in 2019

Strategic service management offerings typically deal with parts management, price management, workforce management, and / or knowledge management. Strategic service management is gaining popularity because optimal parts and workforce management combined with optimal aftermarket parts and service pricing can significantly increase service-based profits, often by 20% or more. When the right products is in the right place at the right time to be put in the hands of the right technician for the job, the cost of service can be substantially reduced. The reality is that poor service translates into real losses which go beyond any financial penalties specified in your SLAs; real losses that can be prevented with good strategic service management processes and technologies.

As elaborated on in the wiki paper, Strategic Service Parts Management is the alignment of planning, forecasting, and inventory management to make sure you can respond to customer needs as they arise, without costly expedited shipping, unnecessary wait times, or financial losses (that can result from service level guarantees or losing a sale because you can’t meet the demand). Done right, it can save a manufacturer tens of millions of dollars (especially in the aerospace, automotive, and defense verticals).

As discussed in detail in the wiki paper, Strategic Service Price Management is concerned with optimizing the price of of your (after-market) parts and services. If a product isn’t available, or is priced too high when a customer wants it, that can result in a lost sale as well as dissatisfaction that may prevent the customer returning to you in the future. Similarly, if the product or service is priced below what an average customer is willing to pay, you’re losing money. In order to maximize profit, your products, and particularly, your service offerings around the products you offer, have to be priced just right.

As explored in the wiki paper, Strategic Service Workforce Management is the process of actively managing your workforce to keep it at peak productivity. Similarly, a strategic service workforce management solution is a software-based solution that optimally plans and dispatches field service technicians and their properly stocked vehicles to a customer’s location in a timely manner in order to deliver on their service commitments. Such a system will typically addresses demand management, workforce scheduling, workforce dispatching, and mobility solutions.

As addressed in the wiki paper, Strategic Service Knowledge Management is the process of identifying, creating, representing, and distributing knowledge to your service professionals when, where, and how they need it.

For a deeper dive into Strategic Service Management, see the following posts.

• Strategic Service Management
• Strategic Service Parts Management
• The Complexities of Strategic Service Management
• The Art of Service Management
• Designing for BPO and Shared Services

^* The e-Sourcing Wiki was created and maintained by Iasta, which was acquired by Selectica in 2014 (which renamed itself Determine in 2015). It was retired by Determine (which did not actively maintain it) before Determine was acquired by Corcentric in 2019

The calculation of the sales and operations plan should be done by a cross-functional team that includes marketing, sales, production, procurement, and any other affected business unit so that every unit of of the business works off of the same numbers towards the same goals. It should also follow best practices that focus on critical information and a structured approach.

For more information on the intersection of sales and operation planning and the supply chain, please see:

• Global Operations Model Building
• The Secret of Supply Chain Management Success
• Supply Chain Digest’s Eight Step Forecasting Process Using Demand Planning
• Stacking the Supply Chain

Supply chain risk management professionals have to contend with a large number of internal, external, network, economic, environmental, geo-political, and compliance risks on a daily basis. From an internal perspective, there could be production line failures, quality problems, unpredictable raw material or parts shortages, sabotage by disgruntled employees, strikes, and pandemics that cause a large portion of the workforce to become suddenly unavailable for work. From an external perspective, a new technology or business model could emerge that disrupts normal operations across the supply chain. From a network perspective, outsourcing, third party logistics, and vendor managed inventory carry their own risks as do communication network failures, customs delays, and supplier bankruptcies. From an economic perspective, an organization has to contend with the inherent unpredictability of supply and demand, currency valuations, and global financial markets. From an environmental perspective, an organization has to be prepared for natural disasters such as earthquakes, hurricanes, and typhoons. From a geo-political perspective there are acts of sabotage, theft, terrorist attacks, and wars to contend with. And from a compliance perspective there are dozens of security, free trade zone, and customs acts and regulations that need to be satisfied.

Fortunately, modern strategies for supply assurance and cost containment are varied and more complex than the classic strategies of safety margins, just-in-case inventory, reserved capacity, and order expediting which often carried as much risk as they mitigated. Today, supply chain risk managers employee production versatility, concurrent processes, decision postponement, advanced sourcing strategies, business process management techniques, market intelligence, incentives, price hedging, and forward-thinking contracts as part of their risk-mitigation tool kit, tackling strategy, market, implementation, performance, demand, and human risk in the process.

For a much deeper dive into Supply Risk Management, I refer you to the e-Sourcing wiki paper^*. For more information on select areas of risk management and mitigation strategies, please see the following posts:

• A Great Guide to Outsourcing Risk Management, Part I
• A Great Guide to Outsourcing Risk Management, Part II
• A Great Guide to Outsourcing Risk Management, Part III
• A Great Guide to Outsourcing Risk Management, Part IV
• A Great Guide to Outsourcing Risk Management, Part V
• Managing Business Risk
• Key Concepts for Major Procurements
• Real Risk
• Five Types of Supply Risk, and How to Mitigate Them
• Winning the Battle on Risk: Information and Technology
• Disaster Management Lessons from the Private Sector
• Procurement Contract Risk Management
• Tips to Manage Demand and Compliance Risk
• Avoiding Risk Management Pitfalls
• Purchasing’s Best Practices in Risk Management
• What You Can’t Afford Not to Know About Your Suppliers
• Risk is Everywhere!
• Risk is Everywhere! Part II
• Strengthen Your Supply Chain
• Supply Risk — Seize the Initiative!
• Risk is on the Rise … But You Can Do Something About It!
• Equipment Breakdown Risk Management
• Get a Grip on Supplier Risk
• Supplier Management Works … Even in the Public Sector
• SCM Implementation Risk Minimization
• Is Your Legal Team Ready?

^* The e-Sourcing Wiki was created and maintained by Iasta, which was acquired by Selectica in 2014 (which renamed itself Determine in 2015). It was retired by Determine (which did not actively maintain it) before Determine was acquired by Corcentric in 2019