3. INTRODUCTION
Supplier relationship management (SRM) is the discipline of
strategically planning and managing, all interactions with third party
organizations that supply goods or services to an organization in
order to maximize the value of those interactions.
4. COMPONENT OF SRM
• Organizational structure
• Governance
• Supplier engagement model
• Value measurement
• Technology and systems
5. ORGANIZATIONAL STRUCTURE:
A formal SRM team or office at the corporate level. The purpose of such a group is to
facilitate and coordinate SRM activities across functions and business units
GOVERNANCE:
The SRM office and supply chain function are typically responsible for defining the SRM
governance model, which includes a clear and jointly agreed governance framework in
place for some top-tier strategic suppliers.
SUPPLIER ENGAGEMENT MODEL:
Effective supplier relationship management requires an enterprise-wide analysis of what
activities to engage in with each supplier. The common practice of implementing a “one
size fits all” approach to managing suppliers can stretch resources and limit the potential
value that can be derived from strategic supplier relationships
6. VALUE MEASUREMENT:
SRM delivers a competitive advantage by harnessing talent and ideas from key supply
partners and translates this into product and service offerings for end customers.
TECHNOLOGY AND SYSTEMS:
There are a myriad of technology solutions which are purported to enable SRM. These
systems can be used to gather and track supplier performance data across sites,
business units or regions. The benefit is a more comprehensive and objective picture of
supplier performance, which can be used to make better sourcing decisions, as well as
identify and address systemic supplier performance problems. It is important to note that
SRM software, while valuable, cannot be implemented in the absence of the other
business structure and process changes that are recommended as part of implementing
SRM as a strategy