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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
worldwide. Other data-aggregation and enrichment tools are also providing
greater insight into procurement trends and best practices. According to its
proponents, the use of SRM software can lead to lower production costs and
a higher quality, but a lower-priced end product. SRM products are available
from many suppliers in most markets.
5.3.5.5 Improve the Skills of Procurement Staff
SRM is a supplementary responsibility that requires an extra set of skills from
supply chain practitioners. However, most staff members usually do not have the
requisite SRM skill sets, such as a creative mindset, account planning and the
ability to work cross-functionally. It is, therefore, necessary to train procurement
staff in order to equip them with these skills. In addition, new talent that has the
necessary know-how can be brought in to reinforce SRM efforts.
5.3.5.6 Measuring the Benefits
The value derived from SRM initiatives should be quantified to ensure that the
benefits of SRM are neither overlooked nor underestimated. For instance, by
measuring the benefits, it will be easier to quantify cost savings, and to assess
whether products are getting to the markets faster. By measuring the benefits, the
organisation realises the true extent to which SRM is adding value to its operations.
5.3.5.7 Engage Suppliers
SRM is about creating business synergies with suppliers. As much as the
buying company must strive to improve its own SRM capabilities, a need
exists to balance the equation by dealing with the supplier side. Therefore, it is
fundamental to engage suppliers so that the same efforts being made by the
buying organisation to improve its SRM can be made by the supplier. It is also
important to listen to suppliers and follow their counsel. This will make the buyer
organisation a more attractive business proposition, leading to the development
of trust that is very important in nurturing synergistic buyer-supplier relationships.
5.3.6 MEASURING SRM
It is important to measure the performance of an organisation’s relationships with
its suppliers. When relationships with suppliers are assessed, it will be easier
to find ways of improving them, based on the results of the assessment. There
are several performance approaches, but for the purposes of this discussion,
only two will be discussed briefly.
5.3.6.1 Means and Target System
The means and target system is a simple method of measuring the effectiveness
of the relationship between buyers and suppliers. Targets illustrate the extent
to which the company is achieving its goals. Examples of targets include price,
cost, delivery schedules, order cycle times, time to market, quality, etc.