PL Forum Vienna: What is SRM?

A panel debate at the Procurement Leaders Forum in Vienna today, delved into some of the more crucial issues procurement leaders are having to deal with today. Titled Orchestrating change: Strategies to maximise the potential of procurement, the session focused on three key areas - capturing supplier innovation, generating revenue and preparing for the future.

One interesting debate focused on supplier relationship management and what it actually means - and two of the people on the panel had a different take on it.

Julie Digby, regional commercial head and global category lead at Mars, said that her definition of SRM differed from what she reads in the procurement press - instead of focusing on a group of key suppliers, she says that SRM is about Mars being the best it can be for every supplier it does business with. In fact, she wants Mars to be the customer of choice for every single one of Mars’ suppliers.

It’s an admirable objective, but differs from at least one of the other panellist’s definitions. Martin Vickery, director of global sourcing, parts subcontracting at Konecranes, described how his organisation has tens of thousands of suppliers and even when it successfully consolidates down to a more manageable number, it will be impossible to implement a full SRM programme for each of its vendors.

For us, the answer lies in both views. A full-blown SRM programme, with shared benefits and collaborative approaches to value-generation and risk-management can only be successful if focused on a more manageable subset of the supply base. However, that doesn’t mean that the remaining suppliers should be forgotten about.

A less robust, but no less important, strategy must also be put in place to ensure that the less strategic suppliers are still managed proactively and that they feel valued by the organisation.

The fact is that even with the most scientific supplier segmentation, the unexpected will always happen. Innovations will come in unexpected places, as will risks, and by ensuring that the door is open to the entire supply base (within reason) organisations will give themselves the best opportunity to embrace and deal with them before the competition.

David Rae is editor of Procurement Leaders. To subscribe to the magazine, click here.