Supplier relationship management refers to the way you interact with and manage third-party vendors that provide the goods, services, and materials your organization needs to stay operational. Supply management is an essential business practice to ensure that you have cost-efficient vendors that are easy to work with and meet the needs of your organization. Having the best supplier relationship management system in place can help you not only choose suppliers that are the best fit for your business but help you reach your business goals.
Supplier relationship management models are designed to make the relationship you have with your suppliers more successful.
A proper supplier relationship management model will ensure the long-term success of your organization.
Your supplier relationship management process should not only provide guidance for company buyers when it comes to mapping suppliers that will best fit the business model but also provide methodologies and pre-prescribed policies for managing these suppliers. The most effective supplier relationship management system will span the full spectrum of cooperation and collaboration with your suppliers whether they’re manufacturers, wholesalers, vendors, or even import sources.
Best Supplier Relationship Management (SRM) Models for Procurement
There are three main types of SRM models to ensure that your supplier relationship management process is effective and successful.
This supply management model allows your business to develop a partnership with your vendors but does require a significant investment of time and money from both you and your supplier. Determining the reasons why your organization should partner with this supplier like marketing advantages, cost-effectiveness, and growth will help you determine which partnership model is best for your business. It is also best to examine both environments to ensure that the facilitators linking your two organizations are strong. Once you’ve partnered with a supplier, make sure you measure the outcomes you receive from this supplier relationship management model to ensure that it is producing the business outcomes you expect.
Since operational complexity addresses the intricacy of components in the supply chain while market sophistication addresses factors that influence how components are bought and sold, you can only successfully collaborate with your suppliers once these conditions are met. If your supplier relationship management process only looks at cost, and all suppliers are the same, then your relationship with that vendor is purely transactional. If, though, you and your supplier operate in a highly sophisticated market that demands often communication between both your organizations, your relationship is integrated and requires much more collaboration and communication on your part. Depending on the complexity and sophistication of the market you operate in, your relationship with your suppliers may not be too complex but the best SRM model for procurement is an integrated relationship.
Most supplier relationship management systems ignore the risks and costs associated with developing an extensive network of supplier partnerships. When you ignore a supplier relationship management process that looks to create a solid, successful partnership with your supplier, you’ll end up juggling many suppliers who receive poor cooperation from you rather than one supplier that receives the necessary cooperation and communication they need to benefit you better. With a strategic partnership, you’ll be able to have your supplier produce custom products, new technology, and frequent design changes necessary to keep your business successful.
SRM or supplier relationship management is essential to the success of your business. By implementing the right supplier relationship management tools in your business, your supply management efforts will become much easier. Tools like SAP Fieldglass, Shortlist, Supplier Management Software by Intelex, and Vendor Management Software by Onspring can help you refine your supplier relationship management process and ensure that your suppliers are satisfied with the business you provide and vice versa.