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Supplier Relationship Management (or SRM) means different things to different people. For example, type the phrase into a search engine such as Google and you will get more than two million hits, many of which relate to software applications for recording and analysing supplier data.
Others think of SRM as a means of monitoring, measuring and reporting supplier performance.
What you should do in your supplier relationship management programme is to use a process with which you can systematically find and deliver opportunities for delivering cost and service benefits (both immediate and longer term) that your colleagues value and for initiating innovation and continuous improvement.
A selection of benefits from SRM can include the following, depending on the industry you are in.
Service related benefits
o Early supplier involvement helps to shape the question that their product or service aims to answer for you and so gives a more effective solution
o Captures and shares IPR
o Provides a better balance between technical and purchasing requirements
o Reduces the supplier learning curve
o Acts as a free source for "hot housing" and incubating new ideas and problem solving
Commercial related benefits
o Lower cost of bidding and engagement
o Marginal costs from account planning
o Lower costs from target costing and benchmarking
o Reduced costs from supply chain management i.e. suppliers' suppliers
o Better "lock in" of suppliers if demand outstrips supply
o Shared risk
People related benefits
o Continuity of work allows suppliers to have a career path for their people (if you are buying a professional service such as consulting) and "refreshes" ideas and lowers costs
o Enhanced skills from problem-solving with suppliers
o Improved communications and collaboration (if your organisation has multiple sites)
Process related benefits
o Reduced non-value adding tasks
o Capture and use knowledge and learning for use in future work
o Faster response to your needs from improved processes
o A more consistent pool of people (if a service related purchase) who will build a knowledge bank of your organisation
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