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Supplier Relationship Management struggles to find value

August 19, 2013

Today I spent a couple of hours reviewing the Supplier Relationship Management process that has been put in place by an IACCM member company. it is more ambitious than many, in that it covers some 6o suppliers and – to its credit – introduces a graduated process, whereby business units can adopt similar steps for suppliers they deem locally important.

Program definition is thorough and has been adopted across the enterprise – itself no mean feat. But it seems to me that it suffers from a challenge that I am finding endemic to SRM programs. That is, it lacks clarity of purpose and desired outcomes. As a result, it is struggling to demonstrate significant value. It has become a glorified compliance program, with its only significant benefit being that a supplier’s performance and reviews are undertaken in a more coherent way. Previously, everything was done at the business unit level.

Our analysis is not yet complete, but as with other SRM reviews, it seems inevitable that we will be pushing for much greater clarity over the value to be achieved from this investment. In particular, it needs far more mutuality in performance management; it needs to be more creative over real-time reporting so that issues and opportunities are identified and acted upon early; it needs to re-balance the negative (what is going wrong) with the positive (what opportunities could we be grasping).

The process also fails to integrate experience across the portfolio of accounts. Individual relationship managers seem to operate in a vacuum, whereas there must be so much potential learning to be gained from this portfolio of 60 major suppliers. Without knowledge sharing and analytics, the program will struggle to develop insights to ‘best practice’ and it seems tome only a matter of time before management asks ‘Why are we spending money on this additional layer of compliance monitoring?’

Later this week, IACCM is running a webinar on the current status of SRM programs. See the IACCM events calendar at www.iaccm.com for details

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