What is Supplier Relationship Management? (And Why it Matters)

Overview

Supplier relationship management (SRM) is far from another corporate buzzword that says a lot while accomplishing very little. Good SRM practices are actually essential for building a streamlined and reliable supply chain that delivers both stability and value in equal measure. 

Getting the most out of your supplier relationship management processes requires a strong understanding of what SRM is and how it can apply to your business, as well as the tools available for SRM optimisation. 

Market Dojo are industry-leading suppliers of SRM software. Our team are experts in the supplier relationship management process and in this blog, we’ll share details on what SRM is and why it matters.

What is Actually Meant by Supplier Relationship Management?

Supplier relationship management is a comprehensive approach to resource monitoring and supplier engagement, covering all elements of supplier relationship processes from procurement to continued project management. 

SRM helps your business build strong and positive relationships with suppliers, and manage their contributions to your supply chain. 

Supplier relationship management is often used to understand what is happening within your supply chain by monitoring supplier objectives and communications, as well as making sure suppliers are effectively onboarded. Good SRM experience leads to both the best standard of delivery for contracted services and a renewal of service at the end of their original tender “ if that’s what your business desires, at least.

What is the Ultimate Goal of Supplier Relationship Management?

SRM exists to serve multiple purposes, but the primary function of supplier relationship management is to improve your business processes through visibility of suppliers and their objectives, in order to extract as much value as possible from your supplier contracts. 

By improving process management between your business and suppliers, you can streamline communication and service delivery. SRM makes the entire process of working with suppliers more efficient, allowing you to grow and develop strategic partnerships that ultimately benefit your business long term. 

SRM fosters a supply chain environment where everybody wins

Understanding the Importance of Supplier Relationship Management

SRM practice is not a one-sided process. If you’re investing in SRM only for your business’ benefit, then you’re missing the point.

The purpose of supplier relationship management is to create a mutually-beneficial environment in which both you and your suppliers are involved in developing a powerful and cohesive working relationship that is founded on efficient and effective management of objectives, great communication and a commitment to providing value to each other. 

SRM fosters a supply chain environment where everybody wins. When everyone wins, everyone is invested in continued success. 

Six Benefits of Supplier Relationship Management

Through SRM, you’ll experience numerous benefits and advantages as both you and your suppliers work together to fuel better outcomes for your business. 

But what benefits are we talking about here “ for you and your suppliers?

1. Better Procurement Process “ Focused SRM makes onboarding and management of contracts easier for your business. For your contractors, it creates a transparent procurement process resulting in clear instructions with regards to contract objectives, points of contact and overall deliverables.

2. Reductions in Operational Costs “ Supplier procurement is a costly but essential practice. SRM helps to reduce the need for procurement by developing longer-lasting relationships. Fewer tenders means a reduction in operational expenses. Likewise for your contractors, who can now spend less time applying for work and filling out extensive prequalification documents and project proposals, and more time on tasks with higher ROI.

3. Business Stability “ SRM provides reliability and stability. Good supplier relationships mean that your suppliers stick around. The result is that you have a stable and reliable supply chain that you can trust to deliver on goods and services, and your suppliers have a reliable and stable source of work that keeps them thriving.

4. Supply Chain Consolidation “ Development of better strategic relationships through SRM helps you find suppliers that can extend their services to other areas of your supply chain. This consolidation also benefits the supplier by helping them to expand their revenue streams through increasing their output across your supply chain.

5. Reduction in Repetitive Activities “ In a similar vein to reduced costs, SRM can eliminate repetition. You’ll find you are filling out much less paperwork to acquire new suppliers for the same opportunities, as will your suppliers find they’re having to no longer submit the same types of proposals for work again and again.

6. Consistent Development Opportunities “ With the stability within your supply chain afforded to you by SRM practices, you can start looking at the bigger picture. No longer weighed down by having to adapt to different supplier offers and contracts, you can focus on continuous improvement changes to your current supply chain practices, and how you can use them to benefit your business as a whole. Your suppliers can do something similar, growing their business and services around what they’re providing you, instead of focusing on the next projects they’ll need to support and adapting their offers to suit changing demands. 

The result of all these benefits is a stronger supply chain for your business and more reliable projects and work for your suppliers, which creates a working environment in which everyone can flourish. 

Process Management with SRM Software

Supplier relationship management is a tool that can deliver incredible opportunities for prosperity if utilised correctly. Note the use of the word, ‘correctly’.

Good supplier relationship management is built on the back of digital technology. SRM is all about streamlining processes, improving efficiency and making communication between you and your suppliers easier. 

To do this, you need modern advancements in digital and cloud-based technology. Managing SRM through archaic methods like emails and spreadsheets is counterproductive to the desired end results. Instead of excel spreadsheets, you want centralised databases. Instead of notebooks filled with contact details, you want dynamic digital logbooks that allow for easy record-keeping and referral. 

The best way to enhance your procurement and supplier management objectives through SRM is via the use of SRM software, which includes Market Dojo Supplier Management solution.

SRM software is purpose-built to manage the supplier relationship management process and deliver the best results. Through our solutions you can: 

• Centralise All Your Supplier Data “ Cloud-based SRM software pools all your supplier information within a centralised database. You can access the service anywhere and gain complete access to all elements of your supplier relationships. The platform is custom-built to streamline your SRM activities and ensure improved supplier visibility.
• Integrate Your Sourcing & Onboarding with SRM “ SRM can be integrated with your supplier onboarding tools to automate the process of getting suppliers into your supplier relationship management ecosystem. Suppliers don’t have to do anything beyond their normal onboarding process, as their accounts are connected to your SRM solutions through intelligent technology. This integration extends to your sourcing activities, including requests for information/proposals, tender bid data and supplier contracts. In essence, any data that has been gathered from the initial point of contact will be available through your SRM software. It makes life easier for everyone, while ensuring all your suppliers are included in SRM practices.
• Track, Monitor and Manage Relationships “ Within SRM tools you’ll find supplier profiles, which include any and all recorded information relating to the supplier. You can see their current status, monitor objective progress, manage contracts, source contact information and more. This becomes your one-stop location for supplier relationship management. With all supplier information within a single profile, you can gain full oversight over supplier objectives and progress, empowering smarter relationship decisions.
• Assign Internal Tasks to Supplier Accounts “ SRM software can be connected with your staff accounts for task assignment. You can manage workloads, monitor progress and ensure total clarity when it comes to who is responsible for what within your supply chain. This clarity extends to external partners. Your suppliers can get a full understanding of their contact points and who to go to with queries or updates.
• Record Communications & Updates “ Logbook features allow for digital archives of all supplier calls, emails and notifications. You can keep track of everything, which helps you address contract changes, concerns, delivery problems, suggestions for improvements and positive feedback that can be leveraged for even better results. You’ll never miss important communications or be in the dark about messages from suppliers.
• Create Supplier Reports for Strategic Insight “ All the information stored on your SRM software can be used to develop reports for stakeholders and key management teams. Such data can give you insight into improvement opportunities within your supply chain and help you progress your supplier relationships by addressing problems, building on successes and delivering innovation.
• Track Internal Procurement Objectives “ SRM tools allow management teams to monitor and oversee the key procurement objectives of their staff, helping to identify successful procurement project management as well as bringing attention to problem areas. Problem areas include objectives being missed, delays in procurement process, issues with contract negotiation and difficulties in logistic management. 

Without SRM software, you face an uphill battle to develop truly beneficial supplier relationship management processes. The reason SRM has become so popular in recent years is because digital technology makes it so simple for you to connect your suppliers. You can run SRM strategy without SRM software, but it’s like running a taxi service without cars. You can use other resources, like bikes, but it’s going to be a slow and cumbersome process that doesn’t deliver the benefits people actually want to see!

More Resources

To learn more about how Market Dojo can help you streamline your processes, saving time and money, download our eGuide The Ultimate Guide to Power-Up Sourcing or Book a Demo with our sourcing specialists.