| Supplier Relationship Management can deliver | | | | areas in which you might collaborate in order for you |
| significant benefits for both the buying and supplying | | | | both to increase business. Do they have technology |
| organisation and in today's competitive markets might | | | | that will enhance your offering to your potential |
| be the best chance you have for building your | | | | customers? Can you provide an opportunity for them |
| business success. Even in the public sector and | | | | to prototype products or services in a low risk |
| not-for-profit organisations it is becoming increasingly | | | | environment? Do you have complementary |
| important to establish close working relationships | | | | processes or technology that will enable you to |
| between customers and suppliers. But there are | | | | merge functions and reduce costs? |
| some potential pitfalls if you choose the wrong | | | | 4. Make sure they have improvement capability. It is |
| partner. Here are some top tips for how to make a | | | | one thing to have a desire to improve processes and |
| good choice. | | | | drive out waste for example. It is another to have |
| 1. Look for similar values. Values are the behaviours | | | | the capability to do it. Ask for examples of how they |
| you expect when conducting business. For example, | | | | have achieved this in the past. Do they have the |
| if you want a close and productive relationship but | | | | tools to deliver improvement such as qualified Six |
| the other party shows you through their actions that | | | | Sigma practitioners or experience of Lean design? |
| they are adversarial and distrusting then you are | | | | 5. Choose suppliers from a strategic spend category. |
| unlikely to have a worthwhile SRM programme with | | | | Benefits for you come often from reducing costs |
| them. Make a list of all of the behaviours you would | | | | and reducing supply risk. For this to be significant for |
| want to see before starting SRM and then test them | | | | you, your suppliers need to supply categories that |
| by observing your chosen suppliers in action. | | | | are in your strategic category so make sure both |
| 2. Identify common goals. Business goals are targets | | | | their importance and risk is high. |
| that you set for what you want to achieve and how | | | | 6. Make sure this is a strategic market for them. SRM |
| you are going to get there from your starting point. | | | | works when there is something in it for both parties. |
| If your intended SRM partners have different goals | | | | This is more likely to be the case if yours is a |
| to yours then it might make it impossible to have a | | | | strategic market for them. You can test this by |
| meaningful SRM programme. But be careful. Goals | | | | constructing a Boston matrix for them (this measures |
| that at first sight look incompatible could be | | | | market growth against their market share). If they |
| re-framed to make them supportive of each other. | | | | have a high market share of a fast growing market |
| For example, you might have a goal to reduce costs | | | | then it will be strategic. |
| and your supplier one of increasing profits. These | | | | 7. Make sure you are an important client for them. |
| look incompatible but might be an reconciled with a | | | | Strategic relationships are intensive and demand |
| plan to increase the range of services the supplier | | | | significant time and effort. For a supplier to invest this |
| provides to you (increasing their revenue and profit) | | | | in you they need to believe that you are important |
| and a corresponding agreement to reduce unit prices | | | | to them. You can increase your importance in a |
| as the same fixed cost is amortised across a bigger | | | | number of ways from making sure you pay on time |
| revenue base (giving you a cost reduction). | | | | to giving them the facility to test out new |
| 3. Assess the ability to create mutual value. Look for | | | | innovations in a low risk way without losing business. |