How to Leverage SRM for Supply Chain Resiliency

Simply stated, supplier relationship management (SRM) is a comprehensive approach to managing your organization’s interactions with its vendors. Historically, SRM’s main goals have been to streamline the B2B technology and processes used for Procure-to-Pay (P2P) transactions in order to maximize quality and profit while lowering production and distribution costs. SRM has also proved instrumental in enforcing regulatory compliance and using data analytics tools to effectively rate supplier performance with:

• scorecards – tools that deliver supplier performance data in reports or dashboards, or
• key performance indicators (KPIs) – measurements of supplier performance as numeric or percentage values.

Although these aspects of SRM are critical for success, the “relationship” part of SRM has often been at best managerial and at worst mutually adversarial, and it would be more accurate to describe the process as “supplier management.” This approach worked well enough in the past for many organizations, but not without its costs in the form of excessive inventory, short-term vendor relationships, negative brand reputation with suppliers,1 and an inability to take advantage of discounts, to name a few. However, today’s economy presents new concerns that must be deftly and efficiently navigated in order to gain competitive advantage, including:

• Complex global supply chains, with suppliers in varying degrees of compliance, performance, volume, size, and technical capability
• Increased demand volatility
• Unpredictability from suppliers, the economy, or the environment
• Increased technology and the “networked economy”

Modern SRM requires a strategic approach to partnering with suppliers to achieve common goals of competitive advantage. This ebook provides three key strategic approaches to build and maintain a lasting SRM practice that hinges on the right combination of tools and business processes:

1. Assess the size and scope of your supply network by categorizing your suppliers.

2. Select an SRM tool that has the capabilities to evaluate suppliers based on the KPIs you require and retain accurate supplier records and policy agreements.

3. Build processes and leverage relationships to make your SRM program a cornerstone of resilience.

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