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Is SRM a thing you do or is it a state of mind?.

Supplier relationship managementBlog

Procurement Leaders has launched its latest research survey on SRM. A key aspect of our study is to define how people are using SRM.

 

It seems as though there are two ways of looking at SRM: one, as a tool in the buyers toolbox; two, as an all-encompassing programme applied to the entire supply base.

 

Many of those that we speak to think of SRM as an output to the category management process. In such a way, it is another lever to use against suppliers. If price negotiation doesn’t work, then perhaps we should become their friends?

 

For many suppliers, SRM is a rather crude means for securing lower prices in the long-term, through a ‘partnership’ forged through lack of ideas by the buyer. As such, people see ‘collaboration’, ‘strategic partner’ and ‘SRM’ as synonymous. But collaboration is just one dimension of SRM.

 

Another way to consider SRM, and perhaps truer to the terms original meaning, relates to how the entire supply base is treated. The strategy for managing suppliers is derived from their importance to the business. This segmentation-based approach directs buyers to conduct relations with suppliers.

 

As a result of a correctly-applied SRM process, some suppliers will be considered a critical group but most will be transaction. Both however will still be subject to the SRM process.

 

SRM is essentially a means of allocating resources and directing buyer activities to the points most vital to business need. In order to implement it to its full potential, there needs to be capacity to apply more collaborative techniques if needed, but it does not necessarily follow that this is the extent of SRM.

 

We hope that in this study we shall see interesting differences in how CPOs apply SRM. Already in our results we are seeing stark differences between those who fully segment their supply base, those who believe that use SRM on a piecemeal basis and those who have no use of it at all.

 

You can take our survey here.

Jonathan Webb
Posted by Jonathan Webb