Five Moves to Create Stronger SRM

The Procurement Leaders Playbook, published by The Purchasing and Procurement Center has shared five ways in which businesses can create better relationships with their suppliers.

Where, given the current business landscape, it is vitally important to do so.

As supply chains continue to be at the mercy of external factors, like geopolitical tension and natural disasters, for businesses, having a strong set of suppliers with good relationships can be pivotal to finding success.

1. Ranking the supplier base

There is a hierarchy in the importance of suppliers. So rather than treat them all as equal take use of tools like the Kraljic Matrix or a simpler ABC model to categorise suppliers based on strategic importance, spend and risk exposure.

This week's action items:

• Classify suppliers into strategic, preferred and transactional categories
• Assign relationship owners for your top 10 suppliers
• Review existing contracts and communication frequency

2. Creating joint value plans (JVPs)

For those suppliers who are considered strategic, creating Joint Value Plans — collaborative roadmaps with shared KPIs. With this, the supplier management will transform into more of a collaborative relationship.

Essential JVP components:

• Shared innovation objectives
• Quarterly business reviews
• Process improvement targets
• Clear escalation protocols

3. Use a supplier scorecard to drive change

Make the scorecard a tool which is at the centre of the business work, forming actionable tasks.

Featuring items both of quantitative metrics (delivery, quality, cost) and qualitative factors (responsiveness, innovation, ease of doing business).

This week's action items:

• Share current performance feedback with top suppliers
• Request their feedback on your performance — effective SRM works both ways

4. Establish SRM KPIs within the procurement dashboards

If you are not closely following the SRM and keeping notes of what it is achieving, then there is no hope for improvement. Businesses should follow metrics, such as:

• Percentage of spend under strategic relationships
• Number of active JVPs
• Supplier innovation contributions
• Average supplier satisfaction score (yes, measure this too!)

These should then be integrated into quarterly procurement performance reviews.

5. Implement a supplier engagement calendar

Relationships are built on communications, with regular check-ins vital for pushing forward. These check-ins should include items such as:

• Monthly check-in calls
• Quarterly reviews
• Annual supplier summits or virtual roundtables
• Supplier appreciation or innovation awards

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