Monday 17 August 2015

Value of Managing Supplier Relationship and its Benefits

Authored by Usama Shahid
Mostly I have analyzed that most ignored part of any strategic sourcing is managing relationship with supplier. Many times, the sourcing endeavor goes through a tremendously detailed and laborious process of vendor selection only to disband the team or not fully cultivate the relationship on both sides of the desk. Why is this step so important??
  1. To gain the significant savings from Continuous Improvement
  2. Innovation of Suppliers
Only by establishing an effective SRM program will you begin to realize the savings and improvements that were initially targeted early in the sourcing process. During this step, the team should be focused on contract execution, establishing field effectiveness teams to implement new ideas or processes, developing continuous improvement cost drivers with the selected supplier(s), and refining the score cards and metrics originally developed to measure performance.

These include but are not limited to:
  • Organizes our thinking about an approach to leveraging spend Forces us to operate collaboratively across business units.
  • Encourages us to think creatively about Supplier Relationships
  • Provides a focus on opportunities to generate savings in targeted spend or process areas. Requires more us to develop new thinking about Performance Metrics will lead to better quality improvement issues
  • Improves internal teamwork and communications Will result in streamlined business processes Will produce Innovation from the supplier base.