The relationship with the supplier can either make or break a business' ability to effectively manage assets, maintain cost effectiveness and service customers responsibly and reliably. An organization can enjoy an array of benefits such as higher customer satisfaction, greater frequency of on-time delivery by suppliers, better responsiveness to customer demands, lower risk of disruptive events in the supply chain, improved supply chain efficiency, less risk of damage to brand's reputation and increased revenue with good supplier relationship management.
To achieve these benefits, an organization has to take some steps to establish good and working relationship with the supplier that is outlined in the following paragraphs.
To achieve these benefits, an organization has to take some steps to establish good and working relationship with the supplier that is outlined in the following paragraphs.
Step 1. Determine Desired Results
The SRM programs need to be fully accepted by top management such as COO and CEO who make decisions that impact the business P&L. It is the top echelon of management will now lead departments into the acceptance of the program.
Step 2. Carry out Maturity Assessment of SRM Already in Place
Most organizations have some sort of SRM program in place. Strategic sourcing can conduct a maturity assessment to determine what level various departments use an SRM program to manage and improve upon their relationships with suppliers.
Step 3. Conduct a Review of Existing SRM Programs within the Organization
In order to build confidence based on the success of other SRM programs, you must review existing supplier management programs to identify areas that are doing well and where improvements are needed.
Step 4. Determine if an ROI Approach is needed
If the objective of the organization is to improve cost efficiency and increase savings, then ROI should be calculated with the help of Finance in order to build a realistic case for the SRM program. However, if the program is focused on other objectives such as risk, the help of Finance may not be needed.
Step 5. Build the Shell of a Program Based on Likely Program Components
Conduct a research to find out the kind of procedures, tools, and process that will be needed in executing and managing the supplier relationship management program. The aim of this is to provide a clear idea of the scope of the program and stakeholder's involvement.
Step 6. Use Case Studies
Case studies can be valuable when you want to sell the program to stakeholders. Conduct a research on the company to find out if you can use other successful SRM programs as testimonials to the potential success of a similar program.
Step 7. Create an Internal SRM Team
Identify those that are going to be the member of the internal SRM team such as employees who currently interact with important suppliers. Include other departments such as Finance and Legal, and managers that are in charge of contracting supplier services or products and executives that are tasked with making ongoing strategic decisions. Get the team ready for brainstorming sessions, creating scripts and guidelines where necessary.
The SRM programs need to be fully accepted by top management such as COO and CEO who make decisions that impact the business P&L. It is the top echelon of management will now lead departments into the acceptance of the program.
Step 2. Carry out Maturity Assessment of SRM Already in Place
Most organizations have some sort of SRM program in place. Strategic sourcing can conduct a maturity assessment to determine what level various departments use an SRM program to manage and improve upon their relationships with suppliers.
Step 3. Conduct a Review of Existing SRM Programs within the Organization
In order to build confidence based on the success of other SRM programs, you must review existing supplier management programs to identify areas that are doing well and where improvements are needed.
Step 4. Determine if an ROI Approach is needed
If the objective of the organization is to improve cost efficiency and increase savings, then ROI should be calculated with the help of Finance in order to build a realistic case for the SRM program. However, if the program is focused on other objectives such as risk, the help of Finance may not be needed.
Step 5. Build the Shell of a Program Based on Likely Program Components
Conduct a research to find out the kind of procedures, tools, and process that will be needed in executing and managing the supplier relationship management program. The aim of this is to provide a clear idea of the scope of the program and stakeholder's involvement.
Step 6. Use Case Studies
Case studies can be valuable when you want to sell the program to stakeholders. Conduct a research on the company to find out if you can use other successful SRM programs as testimonials to the potential success of a similar program.
Step 7. Create an Internal SRM Team
Identify those that are going to be the member of the internal SRM team such as employees who currently interact with important suppliers. Include other departments such as Finance and Legal, and managers that are in charge of contracting supplier services or products and executives that are tasked with making ongoing strategic decisions. Get the team ready for brainstorming sessions, creating scripts and guidelines where necessary.