Straight-up Supplier Management: Differentiating with a Smart Strategy
Manage Supplier Connections Efficiently with Supplier Relationship Management (SRM)!
Supplier management is crucial to the success of any organization, regardless of its size. Yet, the term 'supplier management' can be deceiving; it's not just about managing suppliers - it's about spotting the difference between a hot shot and a hopeful, strategic mover and a minor player. Enter the three-tiered model of supplier relationship management (SRM), that'll help you categorize your supply base and allocate resources intelligently within a formalized supplier relationship program (SRP).
The Nuts and Bolts of SRM
The development of supplier relationship management (SRM) saw the emergence of a variety of hierarchical models to categorize suppliers. Here's a simple yet effective three-tiered model to fit our SRP discussion. More levels can be added depending on the existence of specific partnerships or alliances.
- Strategic Suppliers
- Think heavyweights with the biggest budgets and deepest roots in the relationship. These are the partners driving innovative projects and steering the company's competitive edge.
- IKEA, for example, uses their IWAY Supplier Management program for these top dogs.
- Preferred Suppliers
- They play a significant role in the game, but they're not the championship team. These are the reliable go-to's for routine or standard stuff, with a moderate level of budget.
- Approved Suppliers
- These guys make up the majority of your supply base. They offer commoditized goods and require basic transaction management.
The Action Plan: Implementing SRM
- ** segments supplier base**: Classify suppliers on factors like budget, strategic importance, risk exposure, and availability of alternatives.
- ** tailor strategies**: Create custom approaches for each tier, focusing on collaboration and innovation for top-tier suppliers, efficiency for mid-level firms, and basic transaction rerouting for approved suppliers.
- ** build relationships**: Forge bonds with key partners through regular communication and clear expectations.
- ** keep tabs**: Monitor supplier performance and adjust strategies as needed to hit business objectives.
Criteria for Relationship Status
- Budget: Higher budget usually indicates a more strategic relationship.
- Importance: Partners vital to product development or operational continuity top the list.
- Risk: High-risk providers need enhanced management.
- Specialized goods: Unique suppliers are typically strategic.
- ** Alternatives**: Limited alternatives can boost a supplier's strategic clout.
Implement this criteria-based model, and you'll efficiently manage your supplier base, amplify operational resilience, and meet long-term business objectives.
Got Suppliers? Get Strategic!
Don't settle for a transactional relationship with suppliers. Equip yourself with strategic intelligence to craft better partnerships and move your organization forward. The game is about winning, not just playing.
- A crucial aspect in the strategic mover's approach to supplier relationship management (SRM) involves collaborative planning with strategic suppliers, as they are the key partners driving innovative projects and steering the company's competitive edge.
- In the process of procurement, it is important to consider the supplier's position in the three-tiered model of SRM, such as the strategic suppliers who demand more resources due to their significance in the business and the approved suppliers who offer commoditized goods and require basic transaction management.
- To develop a robust supply chain strategy, businesses should focus on technology to facilitate efficient collaboration with strategic suppliers, finance to allocate resources appropriately within the formalized supplier relationship program (SRP), and business acumen to manage the relationships effectively.
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