Take a second to think of some of the most productive relationships you've had your entire life, what would you say has kept those relationships waxing strong?
I can imagine several reasons wafting through your mind now. Efforts you had to make, actions taken, sacrifices made…. You'll agree with me that in every relationship that has worked, there's a good measure of intentionality and commitment on the part of those involved.
Now let’s bring this into supply chain management… More than ever before, many organizations are now looking for ways to manage their relationship with suppliers.
And the reason for this is not farfetched. Recent challenges have emphasized the importance of managing supply chains in such a way that ensures quick response and adaptability. Suppliers are a big part of the supply chain and if the relationship is not managed well, it could negatively impact the supply chain.
The broad term for managing suppliers is what we call supplier relationship management, (SRM). Simply put, SRM is the process through which you build and manage the relationship with your suppliers.
The main objective of SRM is to maintain a mutually beneficial relationship between you and your suppliers, especially those who are most strategic to your organization's growth.
Here are 4 key elements to implement for effective supplier relationship management:
📍Perform Supplier Segmentation: This is the process of categorizing your suppliers by the influence they have on your organization. It is where you determine who your key suppliers are; those who have the most impact in keeping your organization running, so you can focus efforts in this area. It is important to note that even suppliers who don't contribute as much to your organization would need to be managed as well, everyone has a part to play.
📍 Create Your Supplier Strategy: Here is where you'll map out a plan to develop mutually beneficial working relationships with your suppliers, from the most critical supplier to the least important. Keep in mind that you aim to build collaboration and mutual support so you are expected to invest in the relationship through targeted efforts such as ensuring timely payments, keeping communication lines flowing and open, proactively setting plans to manage risks and other issues, developing effective metrics to evaluate performance and giving room for feedback too.
📍 Implement Supplier Strategy: Based on the strategy you've outlined, you could put in place, a focal point for each of your key suppliers who will be bridging the gap of communication between your organization and them. This approach is great for addressing little issues before they escalate, and will also help you determine when to change suppliers depending on your organization's evolving needs.
📍Develop SRM Systems: Next, develop SRM processes and implement systems that work. Think about how you can leverage technology to keep relevant supplier information in one location, making it easy to manage contracts and evaluate supplier performance. To get started, choose a suitable SRM software and start keeping track of your suppliers' data.
Supply Chain Management just got easier. To learn more about supply chain management and procurement processes, visit academy.efemini.com
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