Revolutionise your Partnerships with Strategic SRM

Supplier Relationship Management (SRM) has been gaining momentum across organisations over the last 20 years. 

Let’s look at SRM by the numbers. The American Productivity & Quality Center (APQC) – a non-profit specialising in benchmarking business practices for the Fortune 1000 – found that 60 percent of organisations cite reducing supplier risk as a key benefit of SRM. This is backed up by the fact that 71 percent of companies have chosen to implement SRM.

While this is good – the other side of the coin is innovation. The APQC study revealed 46 percent of organisations are using SRM to drive innovation and provide a competitive advantage. 

As an academic who studies the art, science and practice of highly collaborative win-win relationships, I have seen first hand that not incorporating continuous improvement and innovation into your SRM is a huge miss. It prevents organisations from tapping into the potential of suppliers. 

One reason organisations fall short is they bring a conventional ‘vendor’ management mindset to SRM. Rather than adopt progressive practices – the focus is on supplier relationship management rather than strategic relationship management . The result? Your SRM is likely having far less impact than it should on driving suppliers to reliably innovate or improve processes.

Understanding Next-Generation SRM

Next-generation SRM encompasses the entire procurement process, not just the end-stage controls and performance measures of managing the supplier after the deal is signed. This means aligning SRM processes with business goals helps to determine which sourcing business model to use, as well as identifying the appropriate measures and governance mechanisms. It also means knowing when to allow suppliers to innovate how to deliver the desired outcomes. 

Next-generation SRM starts during the procurement process by scrutinising potential supplier relationships for collaborative opportunities to drive long-term, mutually beneficial partnerships. In this context, procurement’s focus should be less about the state of the supply market and more about the business model required to achieve the desired outcomes. How you buy should ultimately matter more than what you buy.

Simply put, traditional SRM approaches are widely neglecting the opportunity to create value and drive innovation with suppliers because they are focused on managing for today instead of designing a collaborative business model for tomorrow. Rather than viewing suppliers as sources of risk, organisations can view suppliers as potential sources of innovation. 

This isn’t a matter of tweaking SRM best practices but instead knowing how and when to architect a SRM program using proven design principles. 

Designing Your SRM Program

As part of the session The Faculty is running, I will be sharing insights from the University of Tennessee’s work on building highly collaborative supplier relationships. Join me as I share 10 SRM design principles that are helping organisations make this shift from simply managing suppliers to more strategically working with them. 

Even if you are just starting your SRM journey you can benefit.  Far from being a one-size-fits-all approach, these principles can be scaled to suit the unique needs of any organisation – regardless of the size and complexity of the supplier relationships. I’ll even share a cheat sheet to help you design your SRM regardless of which sourcing business model you are using with your supplier.

The Faculty Roundtable members, are you interested in finding out more? The only way to do so is to join our upcoming session on 16th May, where we will cover all of this and more, opening up a whole world of potential when it comes to Strategic Relationship Management. By coming to the session, you will:

• Gain an understanding of the 10 design principles essential for achieving Successful Strategic Supplier Relationship Management. 
• Explore tangible examples illustrating the application of each design principle, providing actionable insights for immediate implementation. 
• Engage in an exclusive Q&A session with Kate Vitasek, utilising her expertise to refine and perfect your strategic supplier relationship management initiatives. 

This article was written by Kate Vitasek.