SUPPLIER RELATIONSHIP MANAGEMENT
Ten Steps to Designing an
Effective SRM Program
In almost every industry, supplier relationships can either
make or break an organization’s ability to service customers responsibly and reli-ably while maintaining cost
effectiveness and managing
Organizations can establish
strategic goals to minimize
inventory investment and
lower transaction costs while
advantage and expanding
globally. Supplier relationship
management (SRM) programs
that drive effective collaboration and supply chain synchronization with suppliers
are critical success factors in
serving customers and meeting strategic goals.
—Marisa Brown, director, APQC
Knowledge Center, and Rob Spiegel,
uccessful programs have four major components: methodology,
collaboration and supply chain synchronization, technology
processes, and measurement and rewards. Each of these best
practices also has its own components that total 10 overall. Below
is an outline of the elements of a successful SRM program.
Supplier Relationship Methodology
1. Partnering with suppliers and integrating SRM methodology into strategic
sourcing improves supply chain effectiveness and customer service.
2. Effective SRM aligns with corporate goals through cross-functional strategic initiatives involving cross-functional teams in supplier relationships.
3. A supplier relationship initiative must be recognized and supported by the
Collaboration and Synchronization of the Supply Chain
4. Strategic relationships require time, trust, mutual understanding, consistent
communications, and mutual commitment to establish a long-term relationship.
5. Building an effective supplier relationship framework involves identifying
and categorizing spend characteristics and then implementing initiatives across
a rationalized supplier base.
6. Working with suppliers to develop mutual capability and integrated
strengths serves to continuously improve supply chain effectiveness and, ultimately, customer service.
Technology and Processes as Enablers
7. Strategic supplier relationship initiatives require standardized processes,
an organizational structure that supports the processes, and accountability for
8. Joint identification and implementation of tools/technology with supply
chain partners lays the foundation for a collaborative environment.
Measurement, Results, and Continuous Improvement
9. Effective metrics are those developed and set in collaboration with suppliers and stakeholders.
10. Enforcing SRM internally through measurement and rewards ensures
program success and drives results.
The keys findings of APQC’s research into SRM found that best-practice organizations must incorporate their supplier relationship methodologies in both their
business strategies and cultures by embracing it from the senior management
team to the individual process performers, implement the concepts cross-functionally, and drive them home in the reward and recognition systems.