Supplier Relationship Management (SRM) is a systematic approach to assessing and enhancing supplier contributions for business success, focusing on building mutually beneficial relationships. Key elements of successful partnerships include trust, shared vision, commitment from top management, and effective communication. SRM systems and software help businesses manage supplier relationships, streamline procurement processes, and adapt to changing market demands.

1. 3.3 Supplier relationship
management systems
Prepared by Lilian

2. An Introduction
• Supplier relationship management (SRM) is the systematic approach
of assessing suppliers' contributions and influence on success,
determining tactics to maximize suppliers' performance and
developing the strategic approach for executing on these
determinations.
• Supplier relationship management is used by supply chain
professionals involved in areas such as procurement, project
management and operations where these professionals regularly deal
with suppliers. SRM includes both business practices and software.

3. • The definition of supplier relationship management can vary from
organization to organization. However, the typical goal of SRM is to
streamline and improve processes between a buyer and its suppliers -- the
organizations that supply the goods and services -- just as customer
relationship management (CRM) is intended to streamline and improve the
processes between an enterprise and its customers.
• Underlying SRM is the focus on developing a mutually beneficially
relationship with suppliers, especially those deemed as most strategic to
the brand, to promote quality, efficiency, innovation and other benefits.
• Supplier relationship management has become increasingly important as
buyer-supplier networks become more global and interdependent and
companies rely more heavily on strategic suppliers. SRM practices create a
common frame of reference to enable effective communication between
an enterprise and suppliers and to measure supplier performance.
• One major benefit of supplier relationship management is the possibility of
working with strategic partners to increase innovation either through
process improvement, product development or both.

4. Keys to Successful Supplier Partnerships
Building Trust
• With trust, partners are more willing to work together, find
compromise solutions to problems, work toward achieving long-term
benefits for both parties, &, in short, go to the extra mile.
Shared Vision & Objectives
• Both partners must share the same vision & have objectives that are
not only clear but mutually agreeable. The focus must move beyond
tactical issues & toward a more strategic path to corporate success.

5. Keys to Successful Partnerships…cont’d
Personal Relationships
• It is people who communicate & make things happen.
Mutual Benefits & Needs
• Partnership should result in a win-win situation, which can only be
achieved if both companies have compatible needs. An alliance is
much like a marriage, & if only one party is happy, then the marriage
is not likely to last.
Commitment & Top Management Support
• Commitment must start at the highest management level.
Partnerships tend to be successful when top executives are actively
supporting the partnership.

6. Keys to Successful Partnerships…cont’d
Change Management
• Companies must be prepared to manage change that comes with the
formation of new partnerships.
Information Sharing & Lines of Communication
• Both formal & informal lines of communication should be set up to
facilitate free flow of information. Confidentiality of sensitive
information must be maintained.
Capabilities
• Key suppliers must have the right technology & capabilities to meet
cost, quality, & delivery requirements in a timely manner.

7. Keys to Successful Partnerships…cont’d
Performance Metrics
• Measures related to quality, cost, delivery, & flexibility are used to evaluate
suppliers.
• Metrics should be:1) understandable, 2) easy to measure, & 3) focused on real
value-added results
• A multi-criteria approach is best
• Total cost of ownership (TCO), is made up of all costs associated w/acquisition,
use, & maintenance of a good or service
Continuous Improvement
• Making a series of small improvements over time results in the elimination of
waste in a system.
• Buyers & suppliers must be willing to continuously improve their capabilities in
meeting customer requirements of cost, quality, delivery, & technology.

8. SRM systems
• Supplier relationship management (SRM) software/system enables businesses to
manage their relationships between their buyers and the outside suppliers and
service contractors using digital tools.
• SRM software is often paired, or part of a supply chain management software
application, since these SRM activities are a sub-section of that organization’s vertical
product chain from raw materials to the retailers’ shelves. Below are the major SRM
Software/system Suppliers .
EcVision (http://www.ecvision.com/)
i2 Technologies, Inc.(http://www.i2.com/)
Oracle (http://www.oracle.com/) Acquired PeopleSoft in 2005
SAP (http://www.sap.com/)
SAS Institute (http://www.sas.com/)
SupplyWorks (http://www.supplyworks.com

9. SRM systems
Procurement and/or buyer personnel use SRM software to define resupply
strategies, manage contracts, evaluate supplier performance, and establish
strategic supplier relationships. Event management tools, such as email and
text alerts and notifications, help minimize inventory shortages or over-limit
stockpiles. Five key points of an SRM system:
Automation
Integration spans multiple departments, processes, & software
applications.
Visibility of information & process flows
Collaboration through information sharing
Optimization of processes & decision making

10. SRM systems benefits
• Some of the advantages that SRM software can provide for the
organization are:
Streamline and standardize the purchase of goods and services
Shrink procurement costs by closing the loop from source to pay
Automate operational processes to increase efficiencies and avoid
rogue buying
Drive user adoption with consumer-grade shopping interfaces
Gain greater visibility into supplier relationships and performance
Accelerate procurement processing and cycle times

11. Trends in SRM
• Sourcing & procurement are increasing in importance in
organizations. They are becoming more strategic.
• More companies expect more cost reductions to come from their
procurement functions.
• Staff is being reallocated from low-level transaction activities to more
strategic & higher value-added positions
• Companies with effective transaction activities tend to reduce costs
better & have strategic & automated systems