Why Should SRM Be Considered A Priority For Your Business?
Supplier Management is gaining its momentum in the market. When in the past, the only relationship thought to be worth nurturing was the one with the customer, nowadays companies realise fostering a good relationship with the supplier makes all the difference.
Before we get to the reason behind it, let's break down what SRM actually is. The abbreviation SRM stands for Supplier Relationship Management, and it’s a business initiative that enables companies and organisations to take a comprehensive approach to the management of their suppliers by improving processes and increasing the transparency of the purchasing strategy.
SRM promotes close cooperation with the supplier, and through performance management throughout the supply cycle, as well as reduction of non-value-added activities in the process, can result in risk mitigation, cost reduction, and loss minimisation. The solution focuses on the centralised management of suppliers, which covers all purchasing areas, their monitoring and designing solutions aimed at increasing the supply chain's competitiveness.
The SRM journey can be divided into several focus areas:
Identifying business needs - what kind of suppliers our business needs to operate;
Creating sourcing strategy - how can we define the correct supplier; selecting suppliers that fit our business needs;
Managing supplier performance and mitigating the risks in the supply chain to gain a competitive advantage.
Now that we know what let’s focus on the why.
Why should we turn our attention to the Supplier Management topic?
In last year’s Global SRM Research Report, the growing importance of SRM among companies is palpable. The research was conducted on 348 companies across different continents and over dozen global industries, and here are some of the key numbers:
94% of leaders said their suppliers understood the value a supplier management programme provided both parties.
76% of leaders were able to quantify the financial benefits derived from their supplier management programme.
98% of leaders assert that their supplier management programme has improved supplier collaboration, with 68% saying that it has increased greatly.
75% cite improved account management and executive focus as one of the main results of having SRM
While these are some of the newest findings, the topic of Supplier Management is not recent. McKinsey published the results of their survey in 2020, and its conclusion was clear: “supplier collaboration can no longer be considered a nice-to-have”. Instead, it should be viewed as a must-have.
By now, we have gone through what and why. It’s time to focus on the how.
How to make sure your SRM journey is a success?
The significance of Supplier Management is undeniable. However, approaching this initiative might feel overwhelming. To successfully manage the performance and mitigate risks within your supply chain, you need to create a baseline against which you’ll measure your suppliers’ performance, perform routine assessments, identify and mitigate risks, and set and then track strategic objectives.
These are just some of the steps that need to be taken. Doing all this without the right assistance, especially when you work at a scale, is simply not sustainable. Choosing the tool that has the ability to support you with these tasks and fits your needs is crucial for the SRM journey to be successful. Fortunately, at Waeg, we have capabilities within the SRM space, and we’re not talking just about our expertise.
Meet SRM 360°
SRM 360° is a unique SRM Accelerator that aims to support and guide you through your SRM journey with a 360° approach. This product has the power to enhance the process of co-creation between clients and suppliers and break all barriers to innovation and risk management while increasing efficiency and market shares.
Benefits that come with SRM 360°
Risk Management: It allows you to monitor, assess and mitigate any risk related to the suppliers.
Supplier Engagement: Defining business goals that you want to achieve, all the while enabling an open collaboration and interaction with the suppliers.
Performance Management: With this tool, you can not only track but also build strategic alliances.
Procurement Management: It gives you support with procuring projects, selecting suppliers, and the onboarding process.
There’s a whole myriad of other benefits that come with SRM 360°, but in the end, there is one common goal: the improvement of your relationship with the suppliers. And because we live in a world of continuous competition, ensuring that our suppliers are treated at the level our customers are is as much in your interest as it is in theirs. Maybe even more so.
If you’d like to see SRM 360° in action or if you have any questions on the subject, don’t hesitate to reach out to our Business Director, Yves Van Looy.
Wiktoria Kaglik, Copywriter @Waeg, an IBM Company