Supplier Relationship Management

We consistently focus on the key requirements of best practice procurement that include, establishing and maintaining high quality supplier relationships.

Supplier relationship management (SRM) is central to our approach to optimise the value of procurement to our client. We fully accept that a ‘buyer’ cannot control ‘suppliers’ but can influence relationships with suppliers. SRM facilitated by us is based upon a strategy to build two-way relationships with strategic suppliers. This engagement with strategic suppliers is one way to evaluate and manage supplier capability and jointly solve problems. Our SRM modelling requires collaborative working to provide innovative solutions for customer’s needs. This team orientated environment is dependent upon the right relationship for the right supplier.

A good example of SRM where we have proven experience and accrued tangible business benefits is with a prime contractor for a MOD project. High level persuasion and influencing skills were needed to engage with a range of stakeholders and often conflicting agendas. Salient features of the project included:

• Key suppliers ‘owned’ relationships by Directors and Senior Managers
• Long-term forecasts
• Through life costs – cost visibility
• Incentivisation as well as ‘damages’
• Agreed limits of liability
• Governance model spelling out escalation
• Inventory support
• Linkage of systems MOD – Buyer – Supply chain

Key questions that we advise clients embarking on SRM, to consider include:

• Who is responsible for managing relationships?
• Is the business, procurement (and related functions) ready for change?
• What are the opportunities?
• What are the potential barriers?
• What support is needed?
• How is performance benchmarking undertaken?
• Are the identified strategic suppliers ready?
• What skill and knowledge set is required within the buyer organisation?

Our SRM approach is referenced in leading publications. Two examples are CIPS Level 5 course book ‘Contracting in the Public Sector’ 2008 and Pearson ‘Purchasing and Supply Chain Management’ 8th Edition 20012.