| There are well published examples on using Supplier | | | | doesn't just stop there. Here are a couple lesser used |
| Relationship Management (SRM), or Supplier | | | | concepts to reap further benefits from a well |
| Performance Management (SPM), process to enhance | | | | managed supplier relationship: |
| the strategic relationship between the buyers and | | | | |
| suppliers. Specifically, SRM refers to the following | | | | 1. Train the customer: supplier relationship is not a one |
| rules of engagement: | | | | way street. Instead, the time a company spent on |
| | | | supplier development is as essential as the time the |
| 1. Define goals and performance targets for the | | | | supplier spent on "customer development." For |
| supplier, and track them: borrowing from the | | | | example, an electronic gadget design company could |
| common performance measurement index for | | | | invite its preferred printed circuit board manufacturer |
| employee, the targets must be S.M.A.R.T., namely: | | | | to conduct training courses on PCB design. The |
| Specific, Measurable, Attainable, Realistic, and Timely. | | | | customer may be best in designing electronic gadget; |
| Some of the common measurement techniques for | | | | however, the engineers can always benefit from |
| supplier performance are: MOQ, lead time, on time | | | | someone dealing with PCB on a daily basis. The |
| delivery percentage, cost reduction, quality / defect | | | | suppliers also treasure these training opportunities |
| percentage...etc. Some of the lesser used techniques | | | | since they are given the chance to present in front |
| are: environmental improvement, production capacity | | | | of a focus group of design engineers, who are now |
| enhancement, technical capability, reaction time for | | | | more inclined to design according to the supplier's |
| problem resolution...etc. Though the measurement | | | | specification. These are great business development |
| may be different and must be industry specific, the | | | | opportunities that no suppliers will turn down. |
| goal is to provide a good basis to measure supplier | | | | 2. Involve supplier in the early stage of product |
| against its peers. | | | | development: one of the many struggles for |
| 2. Recognize top performers and top offenders: the | | | | procurement professionals is company in general does |
| best and the worst suppliers could be selected based | | | | not involve procurement in the early stage of |
| on the performance targets that were set. Company | | | | product development. Instead, procurement function |
| could enhance the business relationship with the top | | | | is deemed as an overhead process similar to |
| performers with higher business volume, thus | | | | accounting and finance. When the product is finally |
| achieving a mutual gain situation. On another hand, | | | | launched, the procurement department is suddenly |
| immediate improvement action plan can be put in | | | | held responsible to wring out every penny possible of |
| place for top offenders to minimize the impact to the | | | | the design. Instead of using higher impact cost |
| company's supply chain. Further actions can be taken | | | | reduction concepts such as DFA, DFM, material |
| to eliminate the repeated offenders. | | | | selection...etc, procurement officers are only left to |
| 3. Integrate the supply chain for more efficient | | | | conduct hard negotiation sessions, which is never a |
| transaction: SRM integrates the supplier into the | | | | pleasant experience for suppliers. By involving the |
| company supply chain. The supplier will gain insights to | | | | preferred suppliers during the product development |
| forecast, sales projection, inventory level...etc. This | | | | stage, the company can ensure the best design is |
| allows the supplier to prepare and stock material | | | | already a shoe-in feature, and manufacturing |
| ahead of time, instead of waiting for the purchase | | | | transition could become irrelevant, since the suppliers |
| orders from the customer. This not only shorten the | | | | are already familiar with the design. |
| lead time to gain an edge in the ever-more | | | | A well managed supplier relationship is essential to |
| competitive business landscape, but also streamline | | | | remain competitive in the current business landscape. |
| the overall inventory level, thus reduce cost. | | | | It also allows the company to improve its bottom |
| All points above are well developed and documented | | | | line, and direct its capital to more productive means. |
| for a successful supplier relationship. However, SRM | | | | |