Supplier Relationship Management plays a crucial role in business success, yet many organizations fail to do it well.
What are the usual mistakes, and how can you avoid them?
Let Trent guide you with practical SRM tips that can make a real difference through the video below.
Supplier Relationship Management (SRM) is an essential part of the supply chain, yet it’s often overlooked. Many businesses focus heavily on their customers but forget that suppliers are just as important for success. A well-managed supplier relationship can bring more value, better collaboration, and improved outcomes for both sides.
What SRM Really Means?
At its core, SRM is about building meaningful partnerships with suppliers. It’s not just about tracking performance or ensuring deliveries arrive on time. While those are important, SRM goes deeper, aiming to create a relationship where both the company and the supplier benefit.
When done well, SRM helps businesses unlock more than just what’s agreed in a contract. Suppliers become more involved in your supply chain, bringing expertise, innovation, and even cost-saving ideas. This leads to a bigger return on investment—what’s often called a “J-curve,” where the relationship’s value grows over time.
Where Businesses Get It Wrong?
One common mistake is focusing too much on metrics like hitting KPIs (Key Performance Indicators). While meeting targets like 98-99% delivery accuracy is important, it’s not the full picture. These numbers measure performance but don’t build collaboration or trust.
Another issue is poor communication. Just like any strong partnership, supplier relationships need regular and open conversations. Without a clear structure for discussions, problems can escalate or opportunities for improvement can be missed.
Making SRM Work
The key to strong SRM is having a clear plan. This often includes regular meetings—monthly, quarterly, and annually—where both sides discuss performance, challenges, and future goals. If these meetings aren’t already on the calendar, it’s a sign that SRM might not be a priority.
SRM is usually led by procurement teams because it ties into contracts. However, operations teams play a big role too, especially in day-to-day tasks like monitoring costs and resolving issues. For long-term strategies, it’s essential to involve both procurement and operations teams to ensure alignment.
Related articles on this topic have appeared throughout our website, check them out:
- 4 Tips for Effective Supplier Performance Management
- 3 Practical Metrics for Supplier Performance Evaluation
- Why 3PL Relationships are Fraught—And How to Manage Them
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated March 08, 2023, under the title “Supplier Relationship Management Tips“.
