Supplier Relationship Management

The success of business depends on several factors and it will not be an exaggeration to call supplier relationship management one of the most crucial factors. SRM is a discipline of working collaboratively with those suppliers that are vital to the success of any organization to maximize the potential value of those relationships. The goal of supplier relationship management (SRM) is to streamline and make more effective the processes between an enterprise and its suppliers

SRM helps in effectively managing the business relationship with the organization that supplies goods and services for the running of the business. The purpose of the supplier relationship management is to make the relationship between business and suppliers more beneficial. It is a two-way mutual relationship with suppliers that deliver excellent service and goods for the execution of business plans.

To make the SRM process more precise and result-oriented many businesses are using SRM software. With SRM software one can lower production costs without compromising on the quality of the product. Good SRM software is a great advantage for a business house. It helps in creating balance between suppliers and organization. In absence of proper management and control there are chances that the value of a deal can go down.

SRM software is not only useful for creating a healthy relationship, but will also make management task a lot easier. The software comprises of several useful modules and it is useful for inventory management, logistic solution, report generation as well.

SRM is beneficial for all kinds of business and service regardless of its nature. It does not matter whether you are in the construction business or running a hospital with a proper SRM one can get the full value of time and money. It helps businesses in providing quality services at low price SRM, application automates, simplifies, and accelerates procure-to-pay processes for goods and services.

Supplier Relationship Management (SRM) is a SAP product that facilitates procurement.

Improved purchasing efficiencies:

  • Enables end users to procure goods and services
  • Search and order from vendor catalogues
  • Reduce order cycle time through pre‐loaded University contracts
  • Increase order accuracy
  • Enhance approval workflows
  • Increased costs savings:
  • Steer users towards negotiated contracts
  • Improve data for future strategic sourcing efforts
  • Prompt pay discount opportunities

Why SRM is needed?

A business cannot survive in isolation; there are several factors within the organization and outside factors that affect the performance of the business. The future and success of any business is largely decided by the supply chain in which they operate. SRM, on the other side, describes the business structures and processes required by companies to communicate with their suppliers, while providing methods, processes and tools to support the different phases of a direct supplier relationship, e.g. identification, evaluation, qualification, and if necessary termination.

Establish strong connection with supply chain partners and find innovative ways to provide service to the customers. A healthy relationship between organization and suppliers helps in providing quality services to the end users.

SRM is also useful when there is shortage of input materials for production which may occur once in a few years. For example shortage of PTA world over in 1995 where the corporate buyers have to run from pillar to post for the raw material.

SRM that is not well-managed can negatively affect organizations’ performance. It could create a number of challenges like:

  • Involve risk of failure for supplier failure in terms of time, quantity or cost;
  • Quality adherence associated with pressure for ethical sourcing and a corporate social responsibility;
  • lack of communication between manufacturers and suppliers.
  • Lower level of visibility makes problem solving slow and hard to resolve.
  • The company’s position in the market is largely deiced by the efficiency and reliability of the supply network. Supplier Relationship Management (SRM) can offer sustainable and long term benefits at many levels.

Now more and more companies are integrating SRM for better quality and low price. SRM makes the whole process economical.  SRM is useful for automating whole business process. SRM is still in its developing stage and it has lot to offer to the various business and organizations in coming years. Currently it plays a crucial role in business process outsourcing, contract management, service procurement, spends and supplier intelligence, process integration etc.

Use supply chain management to effectively and intelligently explore the available resources.  Get complete value of your time and money with SRM service.

  • Such a great explanation i have read in this blog after reading so many blog posts. I really want this information as i am gathering the information related to supply chain visibility. Thanks for sharing such a wonderful tips and the most essential data with the readers.

  • Supply chain is really an interesting topic. I used to read about it from the last 3-4 days as i have to make an assignment on it. But now i am enjoying reading articles related to this topic. Thanks

  • Benj

    Before implementing SRM software, company should first consider if manual SRM process works. If you don’t have so many key suppliers, manual SRM process is sufficient.

  • Nice post. Thanks for the share. I gathered a lot of information from this post regarding the supply management and the company relations. It will be a guiding factor for me further. I will look forward to it.

  • While many companies have harnessed some of the great Enterprise Resource Planning tools out there in search of a perfect supplier management system, few take the time to set up an effective supplier scorecard, to gauge efficiency in performance metrics.