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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
product without a supplier development programme in place, the buying company
will not be able to benefit from the advantages of the new product.
5.3.4.10 Buyer versus Supplier
In certain cases, owing to the multi-faceted nature of buyer-supplier
relationships, suppliers may have more bargaining power in the relationship.
They may also demonstrate a higher level of shrewdness, which could enable
them to dictate the terms and direction of the relationship as they seek to protect
their positions. Care should be taken to ensure that the influence of the buyer
and key suppliers is well balanced. The relationship should add rather than
remove value and the outcomes of the relationship should serve to satisfy the
needs of both parties.
5.3.4.11 Lack of Systems and Polices
Many organisations do not have the systems and policies that support effective
SRM. Consequently, SRM is implemented manually and haphazardly. This
makes it difficult to improve the performance of suppliers and relationships
that are inefficient and costly to manage. Where systems and policies exist,
they are fragmented and ineffective. Experts should be consulted to assist
the organisation in establishing and implementing suitable SRM systems and
policies. In cases where these already exist, it is important to ensure that they
are streamlined to stimulate improved SRM outcomes.
5.3.5 KEY STRATEGIES FOR SUCCESSFUL SRM
Successful SRM can only be implemented when the organisation is able to group
its purchases by category of importance and complexity. This step contains
the implicit requirement for the firm to know all about the products/services or
material that it intends to buy. How much of what is being bought, from whom,
by which purchasing agent, at what prices, and with what results must be a
part of the stake. SRM can only begin when the firm thoroughly understands
what it intends to purchase; and when it has conducted the standardisation
necessary to make certain the categories of purchase represent what they
should contain. The matrix illustrated in Figure 5.3 is a typical classification of
purchase categories that the organisation has to understand.
The following steps are widely regarded as part of best practice in the
implementation of successful SRM [5].
5.3.5.1 Segmented Supplier Base
Suppliers are categorised into different levels or ranks. This will allow the
organisation to better understand the suppliers that it should concentrate on.
Supplier classes could, for example, include suppliers who are tactical, approved,
preferred and strategic. Suppliers are ranked using criteria such as the criticality
of the products/services bought and the volume of spend (amount of money