Procurement priorities shift focus to SRM

As the worst of the financial crisis appears over and attention returns to long-term initiatives, procurement priorities in many organisations have shifted their focus to supplier relationship management (SRM).

Typically, SRM activity is aimed at improving the way contract management and supplier performance management are managed from the customer side.

A good SRM programme will lower costs, reduce risk, improve quality/service levels and enhance supply chain efficiency. They also deliver competitive advantage in areas such as speed to market and innovation.

Additionally, financial benefits can be expected from SRM activities. Such benefits from joint efforts are shared with suppliers as a way of incentivising them to keep coming forward with ideas.

As Jean-Christopher Deville, general manager of purchasing for Toyota Motor Europe, said: “If a supplier does not find it attractive to work with Toyota, we believe their motivation in the long run will reduce.”

The procurement function, which owns the SRM governance model and processes, needs to be constantly mindful of the fact that SRM is primarily about building trust and working together in a more open way, rather than following a process.

At present, more than half of organisations believe their existing systems – typically, those used for sourcing, enterprise resource planning and purchase-to-pay – provide poor or very poor support for SRM activities. So more investment is required here to complement the development of other skills, processes and governance models.

Working collaboratively can produce superior results over the long term, and a willingness to engage and learn from people outside your immediate function and organisation can bring these results home.

Unlike traditional buyer-seller relationships, successful strategic partnerships are characterised by a high level of information sharing and trust.

The pioneers and SRM leaders have shown a more collaborative way of working is possible and it can deliver significant value when implemented and managed correctly. 

Read more here. 

SRM will be one of the primary content areas explores at The Supplier Management Forums, two CIPSA Special Interest Forums to be held in Melbourne on 16th March and Sydney on 17th March. For details click here