The Path to SRM: From Value Search to New Value Creation

Supplier Relationship Management from Day One

The good news is that our management knows Supplier Relationship Management (SRM.) Some consultants and public speakers did their job well.

The flip side is that they want us to get there immediately.

Instead of the long and boring general fitness improvement, we must build an impressive muscle base from day one. How realistic is that?

Climbing Two Stairs at a Time

Building up the SRM resources and processes from scratch is like attempting to jump two stairs simultaneously. It's not healthy for unfit individuals.

"Climbing two steps at a time will give your leg muscles and buttocks a more strenuous workout and burn more calories per minute. However, the longer stride can be risky if you have poor balance, knee problems, or short legs, which may increase the chance of injuries... 
Stair climbing can work your leg muscles, but it doesn’t address other muscle groups in your body."

So, our intention should be not to injure ourselves and make our internal systems work in harmony. 

Therefore, we need to gradually build our capabilities ground up. 

Procurement value creation steps

Harmonious development of procurement systems  

As suggested in this slide, we search the value by operating the strategic sourcing process (trust me, it's not a given in many companies pretending to pursue SRM.)  

We discussed in our previous posts that the procurement value diminishes unless it's recognized by Finance and reflected in the budget. That can only happen upon the supplier selection and contract signature, as savings and other efficiencies materialize based on actual purchase orders.

Once we identify the value, we need to enable it by masterfully administering contracts. We must be able to find contracts and amendments, analyze current and projected spend, and capture renewal deadlines, risks, and special obligations under respective contracts - even expired ones (e.g., confidentiality, data retention, etc.)

You won't have any constructive SRM discussion with key suppliers without knowing all the tiny aspects of your contracts with them.   

Another element of the meaningful SRM conversation is the supplier performance evaluation. After you discussed past and future business topics, you may wish to analyze the actual quality of deliverables and the end-user opinion as to this supplier. A good supplier retrospective will never get wasted!  

Only then you be ready for the SRM with no traumas and disproportionate shapes. Your procurement is fit-for-purpose, well-balanced, and confident in climbing the evolutionary ladder.

P.S. If you appreciate hundreds of hours invested in researching and writing this blog, you can buy me a coffee or subscribe to the membership by following this link. Thank you!

Buy me a coffee

                                          https://www.buymeacoffee.com/ukrsedo


Follow this blog banner
To keep receiving new insights and research, please subscribe here. 



More information on this and other exciting topics can be found in "The Technology Procurement Handbook." It represents 23 years of experience, billions of dollars worth of successful sourcing projects, and 1000s hours spent on research, analysis, and content creation for the most demanding professional readers.
The Technology Procurement Handbook front page
 


  



Comments

Post a Comment

Popular Posts

The Importance of Supply Chain Collaboration

Image
  Why is supply chain collaboration essential? Once, I was asked what makes the supply chain important to a company. Our profession may not be rocket science. Other peers around the company overlap with us in their functions - Technology tends to manage suppliers , Finance owns the demand planning and budgeting , and Sales and Marketing monopolize the end-customer value chain.  These and other colleagues do not always appreciate us; some believe they are even better at our job.  Shadow procurement, supply chain, and logistics have become standards for many companies.  However, some critical differentiators - like collaboration - justify the very existence of our profession!  The supply chain is the most collaborative function in the business.  We find peers everywhere, even behind enemy lines. We welcome any opportunity to form a cross-functional team with anyone who can bring business value through supply chain strategies, sales  and operations planning,  inventory management,   B
Read more

The Discovery of Procurement Value

Image
Procurement value demystified Unfortunately, " procurement value " became another buzzword – everyone tells us to generate, capture, and sustain it.  This post attempts to provide the most comprehensive view on procurement value and practical methods of its realizations compared to many other web sources replicating slogans and mystifying logical and straightforward concepts.  The meaning of value Value is not substantive. It is rather adjectival. It characterizes something or results from the application of something. It doesn't exist in its raw form; it's being created. It's a universal differentiator between good and bad things or actions. This 1914 philosophical article defines value  as the object of proper judgment . How easier does it make the explanation of value? The value is equally apparent for those who know the truth.  Therefore, we will give different definitions, not pretend to have found the unilateral value formula. Value is paramount t
Read more

The New Looking of Industrial Buying

Image
Industrial buying has been subjected to research for over a half-century.  Instead of treating the act of buying as a spontaneous event, researchers viewed it as a series of patterns explained by the nature of actors, demands, and relationships.   Such a new looking provides a relationship-centric context of industrial buying instead of superficial product characteristics shaping the entire process. Buygrid Framework : An Introduction to Industrial Buying Theory  The Buygrid Framework  (1967)  classical procurement theory analyzes the industrial (B2B) buying behavior and business processes.  It presents industrial buying not as a single event but as an organizational decision-making process where multiple individuals decide on a purchase.  The framework comprises a matrix of " buyclasses " and "buy phases." Buy phases Buy phases pretty much remind the steps of the source-to-contract cycle: identification of needs, establish specifications, Search for alternatives, e
Read more