Chapter 7 - Supplier Relationship Management (SRM)
What is Supplier Relationship Management (SRM)
- SRM maximizes the value of supplier interactions
- organized approach to define needs/wants to key suppliers
- Manages key, high-impact suppliers needing close collaboration
-
Keys to Successful Strategic Partnerships
- Strong supplier partnerships needed for win-win, mutual benefit, sharing risk/rewards
1) Building trust
2) Shared vision and goals
3) Personal relationships
4) Mutual benefits and needs (alliances are like marriages - both should be happy)
5) Commitment from top mgmt to support the partnership
6) Managing change
7) Info sharing and establishing communication
8) Understanding capabilities
9) Continuous improvement (Plan, Do, Check, Act)
10)Measuring performance (cannot improve what isn’t measured, TCO)
- Benefits:
- Buyers: low cost, better service and quality, influence, best people, comp adv.
- Suppliers: efficiency, lower cost, margins, revenues, visibility, comp adv.
Supplier Evaluation
- Actively monitor supplier performance and provide visibility and feedback
- Price, cost, quality, delivery, compliance, development, 3rd party, ethics
- Profit leverage effect: squeezing suppliers to get lowest cost (hurts relationships)
- Weighted criteria evaluation system: point score on score card with different ranges
- E.g. (0-69 pts is developmental, 70-89 pts is acceptable, 90-100 pts is preferred)
- Take rating from 0-100 and multiply by its weight for each category
- Add total points to get total score (supplier scorecard)
Supplier Certification
- Supplier certification programs: prior experience, qualification of suppliers
- Benefits: reduces time/labor, long-term relation, decreases supplier base
- Companies can require internal or external certifications (preferred)
- Internal can be decided by company
What is Supplier Relationship Management (SRM)
- SRM maximizes the value of supplier interactions
- organized approach to define needs/wants to key suppliers
- Manages key, high-impact suppliers needing close collaboration
-
Keys to Successful Strategic Partnerships
- Strong supplier partnerships needed for win-win, mutual benefit, sharing risk/rewards
1) Building trust
2) Shared vision and goals
3) Personal relationships
4) Mutual benefits and needs (alliances are like marriages - both should be happy)
5) Commitment from top mgmt to support the partnership
6) Managing change
7) Info sharing and establishing communication
8) Understanding capabilities
9) Continuous improvement (Plan, Do, Check, Act)
10)Measuring performance (cannot improve what isn’t measured, TCO)
- Benefits:
- Buyers: low cost, better service and quality, influence, best people, comp adv.
- Suppliers: efficiency, lower cost, margins, revenues, visibility, comp adv.
Supplier Evaluation
- Actively monitor supplier performance and provide visibility and feedback
- Price, cost, quality, delivery, compliance, development, 3rd party, ethics
- Profit leverage effect: squeezing suppliers to get lowest cost (hurts relationships)
- Weighted criteria evaluation system: point score on score card with different ranges
- E.g. (0-69 pts is developmental, 70-89 pts is acceptable, 90-100 pts is preferred)
- Take rating from 0-100 and multiply by its weight for each category
- Add total points to get total score (supplier scorecard)
Supplier Certification
- Supplier certification programs: prior experience, qualification of suppliers
- Benefits: reduces time/labor, long-term relation, decreases supplier base
- Companies can require internal or external certifications (preferred)
- Internal can be decided by company
