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Getting To Grips With Supplier Relationship Management

June 23, 2010

Has Procurement really grasped what ‘supplier relationship management’ is about?

That was one of the questions that arose during a meeting with SRM executives last week. The session had been called to review the results of the State of Flux survey on the state of supplier relationship management.  And based on those results, the answer appears to be ‘no’.

For many in Procurement, relationship management is typically seen as an extension of current duties. It is a relatively peripheral activity (rather like the typical view of contract management), occupying at best a few hours each week. The survey reveals that most Procurement-based ‘relationship managers’ handle 3 to 5 accounts. Their primary goal is to ensure continued savings and to oversee performance. Indeed, the point that emerges from the study is that ‘relationship management’ has been seen by the Procurement community as simply another name for ‘performance management’.

This represents a massive contrast with the sell-side focus and perspective of relationship management. For most suppliers, their key accounts are overseen by a seasoned and respected account executive. It is a prestigious role that oversees all aspects of the inter-company relationship and is dedicated to a single account. The account executive has ready access to the top levels of management and has substantial influence and authority.

The State of Flux survey provided indications that those responding understood the challenges for SRM. For example, the skills they highlighted as most important were communications, trust-building and cross-functional working. Their counterparts in Sales would recognise these attributes. But the difference is that the sales organization tends to have such capabilities embedded, whereas they are not characteristics typically associated with Procurement.

3 Comments
  1. Thanks for this post Timothy.

    “….the skills they highlighted as most important were communications, trust-building and cross-functional working”

    We’re building a global legal organization on these principals (The Online Bar). These relational skills were seemingly taken for granted or deprioritized in favour of quantifiable metrics like cost per lead, revenue, closed sales, etc. It seems to those who were mostly trained in “business by numbers” that either you cannot learn these skills or it is uncomfortable to learn them. That’s an unfortunate attitude or lack of attitude with a short shelf life. 😉

    Jorge
    http://follr.me/Jorge

  2. Vince Taylor permalink

    Tim – Good piece but the State of Flux link to survey is a dead end?

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