Process of setting up a supplier relationship program and its importance.

1. SRM
Supplier Relationship Management
by Michelle Lombard

3. The Process
Segmentation
Governance
Performance
Management
Development

4. Segmentation
Who are my key suppliers?
Segmentation
Who

5. Define your criteria Who
Traditional
Supplier
Management
Tier 1
Tier 2
Tier 3
Supplier
Relationship
Management
Concentrate your resources on a limited number of strategic suppliers
Segmentation

6. Governance
Who does what?
Governance
Who

7. Roles

8. R = Responsible A = Accountable C = Consulted I = Informed
Roles
Role/ Task Supply
Chain
Engineering Quality
Contract A/ R C I
Cost A/ R C C
Accept Deliveries C I R/ A
Deliver Returns C I A/ R
Measure On time Deliveries R/ A I C
Reduce Costs A R R
Implement Process improvements I A R
Responsible: person who performs an activity or does the work.
Accountable: person who is ultimately accountable and has Yes/No/Veto.
Consulted: person that needs to feedback and contribute to the activity.
Informed: person that needs to know of the decision or action.
Agree on roles and tasks

9. Set up the internal
governance process.
Who

10. Performance
Management
Why a BRM (Business Review Meeting)?
Performance
Management
BRM

11. Consistent & Structured
The BRM
3. Key Performance Indicators (agreed upon by all the
stakeholders)
• Focuses on the “critical few”
• Obtain alignment internally
• Include compliance as well as applicable laws
• 2-Way Communication – Gap Assessment
1. Set Agenda
2. Determine the Place
4. Future plans

12. Setting the agenda
The BRM

13. Determine the place
Place

14. Operational
Measures
Metric Weight KPI KPI Measurement
Define what KPI means and how it will be
measured.
Cost 30% • Price Competitiveness
• Roadmap
• Identification of savings
i.e. Price roadmap provided annually
Delivery and
Service
20% • On Time delivery
• Delivery accuracy
• Lead-time
• Communication
i.e. Percentage of time deliveries are within
expected window (deliveries are 2 days
early to 1 day late)
Flexibility 10% • Demand modifications
• Consignment program
i.e. Supplier is able to accommodate
changes to forecasts or orders without
significant impact or delay or cost
Quality 30% • Supplier related yield loss
• Product Quality
• Response to CAR’s
• Capability perfomance
i.e. Degree to which capability performance
meets requirements
Partnership and
Technology
10% • Technology roadmap
• Technical support
i.e. Supplier has sufficient technical resources/
bandwidth to provide complete technical
responses in a timely manner
Key Performance Indicators

15. ScorecardMake it Visual
Set
Expectations

16. Title of your presentation
How are you communicating Scorecard

17. Mini-negotiation
The BRM
• More than just performance and progress
• Agreement on certain points may have cost implications
• i.e. Risk mitigation strategies

18. Supplier
Development
Are we done?
Supplier
Development
On Going process

19. A springboard to additional value.
Supplier
Development

20. 1) Full transparency between organization and supplier
2) Improved collaboration
3) Streamlined and reduced sourcing activities/ lead times
4) Improved quality, manufacturability, and reliability
5) Increased supplier responsiveness
6) Increased customer satisfaction
7) Increased visibility supply base to all levels of the organization
Supply Partner
Supplier
Development

21. Move from Strategy to
Action
How does it affect me?

22. “Companies don’t compete,
Supply Chains do”
Bob Manzcka Michigan State University