SRM – managing relationships with suppliers
SRM (supplier relationship management, relationship management with suppliers) — activities of the company aimed at increasing the level of procurement management, developing engagement strategies with key suppliers, optimising business processes and subsequent analysis of the results.
The introduction of SRM is usually done in three stages:
- Segmentation of suppliers. Can be conducted in automated mode on the basis of personal criteria, the results of collection and classification of the maximum available information. All information about suppliers are presented in a visual form so that employees can quickly and easily find the data they needed. Important point — the selection of key suppliers, from the relationship which determines the profitability and risks of the enterprise.
- The strategy of interaction with suppliers. It is not necessary to spend significant resources to relationship management “transactional” suppliers that supply insignificant and easily replaceable products. But should pay maximum attention to strategic partners that supply is important for production materials and components, especially if the choice among such providers is small.
- Implementation of the strategy of relations with suppliers. Special care and maximum attention should be paid to strategic partners. Suppliers and customers this level should be aware of the plans to each other. This can even include providing confidential commercial information to the partner so that he could prepare and plan in accordance with the long term strategy of your customer.
As a result of implementing SRM can be provided:
- the creation of a common database of suppliers;
- reduced costs by combining all the needs of the company;
- the reduction of the procurement cycle and, consequently, reducing logistics cycle of the company;
- optimization of labor costs;
- attraction of additional sources of raw materials;
- loyalty already attracted suppliers;
- creating opportunities for a meaningful analysis of needs, allocation of time for negotiation and conclusion of contracts;
- the assignment of duties and responsibilities and specific responsibilities for each employee;
- the involvement of a supplier in the internal business processes of the company;
- the ability to manage the supply chain;
- increase transparency of procurement to internal and external auditors;
- create heightened interest from suppliers in the winning of the competition;
- getting the really best offers from suppliers;
- increase savings on purchases and reinvestment of funds in infrastructure development;
- increasing the degree of control over costs;
- increasing the speed of document flow;
- easy integration of the systems of this class with ERP systems that are already in place.