There are many benefits to be had from the right kind of relationship with your key suppliers. These go beyond the obvious cost and price reductions to benefits that help your organisation to achieve its desired outcomes. Here are a few of them.
2. What is SRM?
Businesses (and increasingly public sector and not-for-profit
organisations) cannot survive in isolation.
Organisations need to form strong alliances with partners
and together find innovative ways to serve their end
customers by being better, faster and cheaper. This is the
reason and basis for Supplier Relationship Management
(SRM).
SRM is a way of working with your critical and strategic
suppliers to systematically identify opportunities to reduce
cost, improve service and quality and innovate. These
opportunities are then run as projects with team members
from both sides.
3. What are the benefits?
Eliminates waste and barriers to effective
service.
Contracts set out what has been agreed
between the buyer and seller in terms of what
will be delivered and for what price.
In practice waste can be created due to
inefficiencies in how the processes, systems
and ways of working of the two sides come
together.
A SRM programme can identify these sources
of waste and eliminate them, creating lower
costs and improved service.
4. What are the benefits?
Builds mutual dependency
If both sides value the benefits they get
from the relationship created by your SRM
programme then they acquire an
expectation that the relationship will be
long-lasting.
This means that in times of scarcity, your
organisation is unlikely to be affected by
any need for the supplier to ration their
output.
5. What are the benefits?
Encourages investment.
If critical and strategic suppliers in your
SRM programme see that it creates value
for them and that the business relationship
is likely to be a long one, then they are
more likely to make investments that
increase their capacity and capability to
deliver what you need.
6. What are the benefits?
Motivates suppliers to go the extra mile.
Arms-length and adversarial supplier
relationships in which every problem is
seen to belong to the supplier create
disillusionment and disinterest for them
and result in a lack of motivation.
SRM programmes create a shared
responsibility and this fairness translates
into motivated suppliers who go out of their
way to help you.
7. Want to know more … ?
Go to http://bit.ly/1cJ26sz and claim your copy of my new e-book
“Power Partners – How to unlock real and
lasting value with your critical suppliers”
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