Supplier Relationship Management Requirements (SRM)
Supplier relationship management is a collection of programs and initiatives aimed at maximizing the value of key supplier relationships. The goal is to improve supply chain effectiveness and dependability through deliberate collaboration and communication with critical suppliers. Ultimately, effective SRM can drive down costs, improve customer service, and make an organization more competitive.
According to APQC, a leading resource for performance analytics, best practices, and process improvement, organizations without formal supplier relationship management (SRM) programs stunningly report 233 percent longer supplier lead times. Furthermore, reducing lead times from suppliers can get inventory in and out the door faster, freeing up cash and ultimately satisfying customers. Organizations without an effective SRM strategy may encounter:
- Greater difficulty in competing globally,
- Higher sourcing costs,
- Higher material pricing,
- Increased inconsistencies in quality and supply,
- Constant adversarial battles with suppliers,
- Continued inability to retain good suppliers, and
- More dissatisfied customers.
APQC recently conducted a best practice study for SRM. The study team identified 10 patterns or best practices of SRM excellence that were consistent across the companies in four areas: methodology, collaboration, technology, and measurement. The best practices related to methodology include partnering, aligning supplier relationships with corporate goals, and organizational support. The best practices related to collaboration include building strategic relationships, rationalizing the supply base, and developing mutual capabilities. Technology best practices include establishing standards and collaborating on technology. Creating effective metrics and developing measurements and rewards to support the metrics are the best practices for measurement.
In moving forward with an initiative such as SRM, we recommend the following:
- Define a clear set of SMART objectives that specifies what your organization expects to achieve from SRM.
- Gain an understanding of industry best practices and what has worked and what has not worked for other organizations in your industry
- Conduct a business process benchmark to compare how your organization compares to industry best practices.
- Define a complete set of requirements that addresses people, process and technology.
Requirement Coach™ from Enfocus Solutions Inc. provides discussion questions based on industry best practices, benchmarking services, and example requirements to help organizations get started with initiatives such as SRM. RequirementPro™ helps organizations elicit needs from internal and external stakeholders and develop a set of requirements that may be used for delivering a SRM solution.
For more information, please download our SRM disucssion questions for requirements elicitation.
