Supply selection and relationship management

Supplier relationship management - Wikipedia

supply selection and relationship management

10 Strategies for Improving Supplier Relationship Management (SRM) You have so many supplier choices that it's hard to choose the best fit, but using Review article titled “Purchasing Must Become Supply Management. Institute for Supply Management (ISM) is the first and largest not-for-profit professional The term "supplier relationship management (SRM)" refers to the practice and . Suppliers, One or two major ones, A few select ones — important and/or. Supplier Relationship Management (SRM) is first and foremost an approach to understand what the supply market and individual suppliers are capable of.

Increasingly, supply professionals that have new product revenue as part of their performance metrics visit trade shows and suppliers without an internal requisition waiting back at their desks. Each type of relationship requires different management and leadership and yields different benefits.

As one moves from the arm's length price relationship toward joint venture, the linkages become closer, more defined, and the benefits are broader and deeper beyond just price.

Internal relationships are just as important as external ones. With SRM these links are common with operations, logistics, accounting and engineering. Internal ones can work against a concerted effort with a supplier or it can create a strong consistency of purpose. There are two types of measurements: Targets are those end goals being sought price, cost, quality, specific logistics details, order cycle times, time to market, etc. Means types of measures are those manageable sub-component activities that add up to accomplishing targets.

ISM - Supplier Relationship Management Insights

For example, an order cycle time target has within it a transportation transit time as a means measure. A common fault here is to over-require means measurements of suppliers.

A simpler approach is to expect the supplier to perform to certain end goal targets. Whether target or means measures are used, stakeholders have specific ones that impact their performance and that of their groups.

2 Strategic Ways to Improve Supplier Relationship Management - Spend Matters

What type of relationship will work toward that? What do you need to measure to assure that it will happen?

supply selection and relationship management

These define the roles. Some key issues here are: To the left are activities common in basic sourcing. As the needs from suppliers increase, so do the needs to measure, control and develop the supplier in overall supply assurance.

supply selection and relationship management

The increased, more hands-on SRM needs are shown as the relationship moves to the right, with medium and more advanced levels of interaction. Where to Go With It?

2 Strategic Ways to Improve Supplier Relationship Management

SRM is often a part of the rollout of strategic sourcing. What is Supplier Relationship Management?

supplier selection procedure

Over the years effective management of supplier relationships has emerged as an essential organizational competence, and should be used to identify the right projects and the right supplier to maximize output from the available resource.

Supplier relationship management can be described as the systematic management of post-contract value from relationships with suppliers over the life of selected key relationships. Supplier relationship management may become one of the few real core organizational competencies.

Relationships for supply chain success

There has been a great deal of research done on the subject of supplier relationship management in operations management; however, in my view, there are two strategic ways companies can improve supplier relationship management. Category or Commodity Strategy Krause2 has suggested the identification of critical commodities for development as a first key step of a strategic supplier development process.

After classifying all commodities into each category, the resulting portfolio discriminates between non-critical commodities and strategic commodities.

supply selection and relationship management

Classification matrix for commodities source: Therefore, if companies use proper commodity strategy, then they can focus resources on what is important for them and drive many improvements.

Either the top management or a small group in a purchasing and supply chain organization translate this recognition of the need into a set of objectives dealing with various performance measures such as cost, quality, delivery performance or strategic objectives.

supply selection and relationship management

The main input to formulate these objectives comes from technical capability, costs, quality and delivery performance from existing and new suppliers, customer requirements and competitive challenges in the marketplace.

Moreover, organizations need to ensure these objectives are aligned with their category or commodity strategy and supplier relationship management initiatives. The main output of this strategic initiative is to select suppliers for development.

Krause suggests companies should have formal supplier performance measurement i.