Supplier relationship management
Adopting a partnership approach with strategic suppliers drives cost savings through innovation while further reducing business risk.
Procurement teams (in-house or otherwise) have a habit of focusing solely on strategic sourcing. Only to then, following supplier selection, neglect the importance of supplier relationship management (SRM).
So, what do we mean by SRM and why do we believe is it so important? Simply defined, SRM is the strategic management of organisations who supply goods and services to your business.It is this discipline which helps to maximise value while also improving supplier performance.
We have found that organisations which have yet to embed SRM techniques are likely to experience any number of issues. These include but are not limited to:
- inconsistent approach to supplier management across the organisation.
- supplier under-performance versus agreed key performance indicators, largely driven by misaligned expectations and inadequate measurement.
- blame culture with little collaboration and little to no root cause analysis.
Taking annual spend and business criticality into account, Hawtrey Dene uses its segmentation tool to profile and assign an SRM category rating to each supplier. These ratings ultimately dictate how each supplier is managed and who is responsible for the ongoing management. Our category ratings are:
- Strategic – high value spend and business critical
- Leverage – high value spend but low risk
- Bottleneck – low value spend but high risk
- Routine – low value spend and low business risk
Following the assignment of SRM ratings, Hawtrey Dene identifies instances where suppliers are not being suitably managed and delivers corrective action plans.
The advantages of effective SRM
A disciplined approach to SRM delivers a range of benefits to all organisations. These include:
- improved supplier performance versus contract KPIs.
- reduction in business risk.
- a better working relationship between the organisation and its suppliers.
- innovative ideas to unlock further cost reduction opportunities, with productivity gains shared between client and supplier.
To learn more about our approach to SRM, how we’ve helped other clients, and how we can help your business improve the performance of its key suppliers, please visit the contact us page.
Call us on
+44 (0)20 3740 4150 or send us
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