Supplier Relationship Management (SRM): The Human Connection
With so much focus on technology in the modern age, it is easy to forget about human connection and its importance in business. This is especially true in the procurement space.
There are several strategies supply chain management professionals can deploy to improve supplier relations. One tactic is consistent communication. That may seems simple, but it can be easy to forget about vendors when you don’t need something from them. Similar to personal relationships in life, a phone call or email every few weeks or months will enhance a connection and build a better bond between companies. Another necessary tactic is proactivity, which can play a crucial role in improving SRM. To reinforce a strategic atmosphere, employees should constantly plan ahead. For example, let’s say a company is planning a large marketing campaign that will drastically increase sales of an existing product. Suppliers may not have the capacity to handle such a change and will need to know well in advance to plan appropriately. A third and important key is to develop a tracking system. This can include tools, such as KPIs, SMART Goals (internally and externally), and questionnaires to continually follow how a vendor may be performing. These three tactics are only a few of the many industry leading SRM strategies.
Additional SRM strategies:
- Ensure visibility across all business functions (Finance, Operations, Accounting, etc.)
- Planned two-way feedback (supplier and customer)
- Supplier Segmentation/Classification
Benefits of SRM
It’s important to know that putting in the work to create a strong SRM system will add value in the short and long term. When it comes down to it, a businesses’ end goal is to make money. Vendor partnerships can lead to both reduced costs and increased revenue and, resulting in higher profitability. This is not only true for the customer, but the vendor as well. Money shouldn’t be your only driver to build relationships though. Supplier loyalty is also likely to increase when you implement the SRM strategies outlined above. Increased loyalty can heighten the product/service quality a vendor provides and potentially decrease competition. Similar to SRM strategies, there are a great number of benefits outside of those mentioned in this text.
Additional SRM Benefits:
- Innovation/Continuous improvement
- Increased supplier visibility
- Decreased risk/Increased security
Try to think of your supplier relationships as partnerships. When you succeed, so does your partner — and vice versa. Some may be short term, others long term, but you can only go as far as your weakest partner.