SUPPLIER RELATIONSHIP MANAGEMENT
Underutilized by Many, SRM
Is a Necessity in Global Trade
In a world where globalization
has taken hold, organizations
must adopt new technologies
and systems to manage their
supply chain risks. An underutilized system technology
that has returned is supplier
relationship management
(SRM). These systems offer
organizations deeper inventory visibility, trade and regulatory compliance capabilities,
supplier accountability and an
effective way to control costs.
—Dylan Persaud, managing director of
Eval-Source
RM systems allow organizations to peer into an extended supply
chain network of trading partners and suppliers. By collaborating
with them, you can be aware of changes in lead times and of
delays and disruptions. These risks can be mitigated early on and
can increase customer service to the public. With the capabilities to view in-transit inventory over multiple modes, an organization can control and manage
potentially critical supply problems.
Issues such as custom delays, extended lead times, scheduling conflicts, and
transportation problems, to name just a few obstacles, can be adjusted and
addressed within the SRM software. This advance notice of possible disruption to
the supply of goods can provide alerts to all partners affected so that they may
react accordingly and adjust to the disruption. The ability to view in-transit products allows for accurate forecasting and replenishment. The collaboration of all the
affected business partners allows organizations to respond to rapid market
changes, and to deliver goods to consumers on time and at decent prices.
SRM systems can also act as a tool for managing ISO, IFRS, government compliance, customs and tariff strategies. Larger retailers, such as the big-box and grocery
chains, have imposed proprietary SRM systems that force suppliers to conform to
their supply-side standards. These systems were mostly created as tools to prevent
stockouts. SRM systems offer advantages such as analysis; control of global spend
by category, volume and product; and management of service-level agreements.
These systems also help avoid duplication of contracts or materials to the same supplier, consolidate purchasing volumes, improve supplier selection and involve partners in the early phases of product development and pre-supply chain activities.
When these factors are addressed, proper planning can take place for compliance
strategies whether they are for customs, industry or for other purposes.
Recent incidents such as lead-contaminated toys and bacteria in foods
resulted in recalls and impacted supply chains in a negative way. The appropriate SRM system can manage, track and trace suppliers that are not performing
up to to service-level agreement terms or quality standards. They not only identify the deficiencies early but enable organizations to work with their supplier
network to achieve the proper quality standards.
S
The Outlook
In 2011, organizations still need to be cautious about spending as recovery
has still not taken hold. Doing more with less, organizations will look to
reduce costs without making capital expenditures. An SRM system provides
insights by gaining deeper supply chain visibility, compliance conformance
and supplier accountability.
