Solutions For Effective Supplier Relationship Management

May 16, 2012 by  Filed under: Management 

Extracting value through capable management of an enterprise’s relationships with its vendors and suppliers of raw materials, goods, and services is the objective of supplier relationship management (SRM). The discipline of streamlining and making more effective the processes that stand between an organization and its suppliers is a further goal of it, and as in customer relationship management (CRM), it involves the use of specific technologies to organize, and make more efficient the business processes that achieve these desired results.

Effective SRM solutions necessitate the creation of closer and more collaborative relationships with the organizations suppliers as a means to isolate and capitalize on otherwise hidden opportunities to control risk and squeeze new value out of existing processes. Sometimes this involves asking a supplier to install software within the confines of its walls to serve as a window into which the client can see some how the supplier runs some parts of its enterprise. With this kind of technology, the organization can rank and rate suppliers against other competing suppliers and gain valuable data and insights into performance differences between them so it can be analyzed. At this point Supplier Relationship Management begins to overlap with Supply Chain Management (SCM).

Globalization of trade is a leading driver of resource management strategies resulting in an increase in demand for compliance and relationship management tools that can help a company squeeze the inefficiencies out of the supply chain. At the heart of it, is movement toward economic Darwinism where companies enthusiastically agree to do things that were previously unthinkable.

One example of this is a large retail chain, which carries two different brands of soda supplied by two competing soda companies. With supply chain studies, our large multi-outlet retailer has discovered that both of these soda companies where arriving weekly with half empty delivery trucks. By convincing these two soda suppliers to agree to consolidate their loads onto just one truck, the retailer saves both of them save money on fuel and driver salaries. The money saved from this process would then be available to go toward price concessions that benefit the organization, which organized and managed this project from the beginning.

Having an efficient and transparent supply network can make the difference between success and failure in business. The enabling of collaboration between customers, suppliers, and even competitors permits the development and implementation of joint activities, and it is through the management and analysis of these activities that we reap the benefits of a more efficient supply chain.

To learn more about SRM, read more of our articles on our web portal.

Article Source:
http://EzineArticles.com/?expert=Jeremy_B_Thompson

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