In the contemporary economic climate supply chains compete against each other, rather than individual organisations.
If it is ultimately a supply chain’s total cost of ownership (TCO) that will determine the affordability of its products, then to be competitive there needs to be transparency, knowledge sharing and collaboration of the different cogs within the supply chain. SmartProcurement researched what supply relationship managers need to have in place for an organisation to improve its bottom line and remain competitive.
Recognise that supplier relationship management (SRM) is becoming co-development.
Research shows that suppliers must see themselves as stakeholders in the supply chain. If a supplier’s business will strengthen owed to a customer’s business growth then the supplier will be keen to help the customer grow.
Organisations must have a transparent approach to critical factors such as quality, lead times and service levels.
SRM is people
SRM is not all about technical skills. “It’s about people. You must hone your relationship skills, your soft skills, your people capability,” said David Loseby, CPO & SRM head at Westminster City Council, UK, during a spend management webinar.
SRM is building true relationships with organisations, he said.
“You wouldn’t have a huge network of friends because you can’t sustain it. Similarly, your network of tier one suppliers needs to be very small and tightly managed.”
This requires building ‘true relationships’, as opposed to superficial ones: knowing someone simply as a contact in your Outlook is not sufficient.
The level of relationship that you have with a supplier should be illustrated by an understanding of where the supplier organisation is in terms of its fiscal / economic / supplier cycle, and dealing with them appropriately.
“People that deliver effective SRM have the social skills to pull it off and recognise that the relationship is a two-way street.
Data delivers tangible benefits to SRM
UK insurance giant RSA operates under the assumption that SRMs involvement is at its greatest during the service delivery stage, said Jamie Napper, the organisation’s Global SRM Excellence Manager.
“We keep an eye on compliance reporting (volume and value), ranking and rating (best to worst suppliers) and reporting from users, stakeholders and executives,” said Napper during the webinar.
Meanwhile, in a recent pole among 750 procurement professionals, 68,9% of the respondents voted that the biggest advantage of good SRM is mutual gain.
“This is a mature result,” said Napper. “It shows an understanding that a win-win result is the best for SRM.”
Among the same group of respondents 66,6%voted that bringing greater spend under management is how improved SRM can best boost spend management.