SRM

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Supplier Relationship Management

The definition of supplier relationship management can vary from organization to organization. However, the typical goal of SRM is to streamline and improve processes between a buyer and its suppliers — the organizations that supply the goods and services — just as customer relationship management (CRM) is intended to streamline and improve the processes between an enterprise and its customers. Underlying SRM is the focus on developing a mutually beneficially relationship with suppliers, especially those deemed as most strategic to the brand, to promote quality, efficiency, innovation and other benefits.​

SUPPLIER RELATIONSHIP MANAGEMENT PROCESS

  • Just as the actual definition of supplier relationship management can vary, depending on which organization defines it, the processes of strategic sourcing related to SRM can vary as well. However, these broad categories can be used to understand the following important supplier relationship management processes

  • Segmenting suppliers, which categorizes suppliers based on their importance to the business;

  • Developing governance and performance management models to align business processes and assign stakeholders according to business goals; and
  • Improving relationships with suppliers, which involves sharing strategic information with key suppliers in order to develop better products and services.

  • The foundation step of supplier relationship management is determining suppliers’ contributions, especially in light of their strategic importance to the success of the business. Different suppliers have different influence on organizational profitability. As a hypothetical example, ABC Smartphone Company’s stationary supplier has little influence on the outcome of its profitability, but its main electronics supplier has a huge impact. Any risk to the electronics maker’s operations is a major risk to ABC Smartphones. This makes the electronics maker a key strategic partner

Importance of SRM​

According to proponents, practicing supplier relationship management can lead to lower production costs and a higher quality, but lower priced, end product. For example, one research study of automakers found clear support for this belief.

The research study, discussed in a May 2014 Supply Chain Management Review, examined the relationship of automakers’ approach to SRM and its profits. Looking at six major automakers, the study found a direct relationship between supplier relations and profit, with better supplier relationships contributing to better profitability, and the reverse for bad relationships. As an example, the study determined that the Chrysler Group missed out on $24 billion in unrealized income from 2001 to 2012 due to a period of rock-bottom supplier relations during tumultuous ownership changes at the company.

Major vendors of supplier relationship management software include SAP Supplier Relationship Management, SAP Ariba and Oracle People Soft. Other, lesser-known SRM systems exist, too. you have the best opportunity in this Module which will help you to take one hike