Supplier Relationship Management: Here is your Checklist for Supply Chain Success!

It serves as a backbone for collaboration between buyer and supplier, during activities such as, but not limited to, pre-contracting, selection, contracting, production, post-production and review/evaluation.

As CIPS describes it, “SRM is a comprehensive approach to procurement, managing and capturing the post contract value from key business relationships” (CIPS).

Leveraging the competencies of suppliers, and building shared value within buyer-supplier relationships is a top priority of the majority of CPOs (Chief Procurement Officers).

According to CapGemini’s annual CPO survey it was determined that concerns that CPOs look towards SRM to address are: creating collaborative innovation, reducing the total cost of ownership and other advantages such as holistic supplier-related risk management.

In fact, the survey found that SRM’s popularity, amongst CPO’s surveyed, was nearly unanimous. Their results found that:

“Supplier Relationship Management is a key priority for 97% of respondents — for 60%, it is a current area of focus within their organizations, while 37% plan to focus on it in the future. And yet despite the focus on SRM and awareness of the value that it can deliver, only 15% of respondents had a unified corporate SRM strategy and associated processes in place. For 27% of respondents, SRM was applied only selectively and focused primarily on contract management, while 30% of respondents had no SRM processes in place at all” (CapGemini 2016).

Widely accepted, yet seldom utilized… Supplier Relationship Management is truly the dental floss of supply chain management systems

All jokes aside, the acceptance, yet reluctance for utilization of a SRM strategy is puzzling.

Maybe it’s not a top priority. Maybe it’s not seen as a method for optimizing supply chain management. Maybe CPO’s know the potential capabilities, but just can’t figure out how to realize an SRM strategy...

Whatever the cause of the chasm, between popular acceptance and actualization, I am here to close the gap.

I would like to build a framework for recognizing the importance of Supplier Relationship Management, as a widely practiced supply chain strategy, and to build a checklist to keep in mind when implementing such a strategy.

Before I delve into my 5 parameters for building supply chain success through supplier relationship management, I want to assure that we’re starting from a place of common understanding for supplier relationship management.

This checklist is developed as ‘must haves’ for a supply chain management strategy.

Strategy: meaning a holistic approach to developing stronger management of supplier relationships rather than a mapping of operational procurement tasks. Strategy is of course the framework for action, and therein lies enhanced operational activities, but my main focus is providing guidelines for a systematic approach to SRM.

You can’t bake a cake without reading a recipe first.

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