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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
5.3.3 COMPONENTS OF SRM
Various elements are involved in the interplay that constitutes SRM:
5.3.3.1 Determining the Need
This element defines the context and purpose of SRM by specifying its
purchasing/sourcing need. Some of the common types of sourcing needs are
listed in Table 5.1.
Table 5.1:
Sourcing needs for SRM.
The need for SRM
Motivation
Consistency and predictability of
supply and delivery
SRM may be implemented to ensure
that supply of materials is consistent
and predictable. This is important in
ensuring that the production process
continues in an uninterrupted
manner.
Pricing and costs
SRM may be implemented in order
to obtain sustainable prices of
materials or services from suppliers
as well as to ensure that the entire
purchasing process is cost effective.
Efficiency (speed, simplicity and
transparency) of the transaction
SRM may be implemented to ensure
that transactions with the suppliers
are executed with ease, clarity as
well as within a reasonable time
frame to facilitate the viability of the
enterprise.
Innovation
SRM may be implemented to
stimulate organisational innovation
as the buying enterprise learns from
the expertise of the supplier.
Quality
SRM may be implemented to
enhance the quality of the materials/
services bought from the supplier,
which ultimately enhances the
quality of the outputs from the buying
partner.
The list in Table 5.1 is not exhaustive as there are many sourcing needs.
However, a common trend is that once the main SRM goal has been established
between a buyer and a supplier, the partners move on to satisfy other unmet
sourcing needs. Usually, the shift in emphasis is dictated by market and supply
dynamics.