Accelerated returns from SRM investments
Organizations looking for ideas to improve their product market competitiveness find Supplier Relationship Management (SRM) process excellence delivering the maximum benefits in reducing overall product costs. This also helps them position their products for revenue growth through improved market share.
Supplier Relationship Management is about win-win collaborative relationship with the supply partner community. This involves alignment of organization’s business goals with the supplier community and enabling seamless integration of the core functions and processes with its extended supply chain in the most efficient way.
Organizational expectations – Organizations look for comprehensive supply management capabilities in their SRM landscape. Capabilities such as right fit partnerships that best meet the organizational culture and goals, relationship strategies based on category supply market traits, culture and skills to drive best practices in strategic sourcing and policies and technologies to provide desired governance and performance assurance. All of these capabilities not only increase value delivered in the supplier relationship but also reduce risk on a sustainable basis.
Supplier partner expectations – Suppliers expect SRM programs to enable high collaboration capabilities with their customers in supplying their products at the right price, in the right quantities, at the right time and service levels. Supplier benefits from standardization of operations across customer organizational entities, increased efficiency of joint processes and timely payment.
A survey[i] on supplier relationship management suggested that
- More than 60% of purchasing organizations did not have an established definition of Supplier Relationship Management in their organization
- More than 50% of the companies having implemented SRM are not clear how to measure the benefits of these initiatives.
Major portion of the manufacturing value chain lies with the supplier partner community and have been traditionally beyond the scope of organizational influence and improvement investments. The complexity of supplier relationship management has increased in today’s world of outsourced manufacturing. The business case for SRM benefits lies in the ability to influence this untapped large value pool outside of the conventional organizational walls. Organizations need to build equal, if not better, capabilities in their extended value chain, as if these were seamless and integrated part of their own organization.
SRM is a very strategic organizational capability. Organizations planning SRM implementation programs need to appreciate that these initiatives are more than technology rollouts. The main reason of post implementation challenges in SRM is the lack of appreciation of issues from a holistic business perspective. Here is a view of some of the key questions to address before embarking on a SRM implementation program.
A holistic approach and program design is required to address all the business considerations for strategic business value objectives, people capability and adoption, process scope, system capability and data quality aspects.
SRM implementation programs are no more about automating purchase transactions as viewed in a traditional product centric IT enablement approach. It needs to be viewed in a much larger canvas of managing the business across partners often distanced by priorities, capabilities, geographies and cultures
