Do many of your suppliers let you down, performing sub-optimally
and embarrassing the sourcing team that selected them? We're
seeing a strong trend amongst our larger clients to plan
significant improvements to Supplier Relationship Management (SRM)
activities during 2012.
These are predicated on improvements to the relationship leading
to improvements in service, efficiency and therefore ROI from
Here are our top five ways clients are improving SRM:
If your department has multiple IT suppliers that have each been
brought in to fill a specific role or need, but no-one has overall
responsibility or time to manage them properly, how can you
identify which ones are performing and which aren't. Until
you know that, how can you decide which suppliers to give more work
to and which to cut from your supply chain? If you understand
what other services those good suppliers offer you could avoid
costly procurement exercises.
Reducing the number of suppliers brings benefits on two
- The supplier works harder and perhaps prices its offerings
better to secure your business
- Your (or our) supplier management function has fewer
relationships to manage and can achieve greater consistency of
monitoring and service improvement
2. and 3. Communication and Active relationship
If each of your Vendor Managers has too many projects on to
adequately monitor all suppliers, you lose out and the supplier
can't feed back to you in a timely fashion on potential service
improvements or cost savings.
Frustrations can occur on both sides if a supplier is not
integrated into your organisation so that they understand your
business and goals. We know from experience that
communication is key to ensuring a successful client and supplier
relationship and enables you to build mutually beneficial
Communication can only come from regular, systematic, governance
of the contract and services, through regular service review
meetings, reporting and a feedback cycle to your service
improvement programme. This active relationship management
differs markedly from where many organisations have concentrated in
the past. Stop firefighting suppliers who cause problems to
your business and ignoring the good ones - start actively working
with the good ones to learn from them if nothing else.
SRM can too easily become a personal matter, with two equally
good Vendor Managers having different opinions of one
supplier. Drive out the inefficiency and subjectivness of
personal opinion by systematising your SRM activities, allowing
your team to run the process but imposing objective discipline on
them. This avoids dependence on one person in your or the
supplier team, and can make good relationships last longer, and
root out the bad ones.
If you devise a process for SRM at the outset of the
relationship, perhaps pre-contract, you'll monitor the transfer of
risk or pricing actively rather than waiting until events force you
to. Those objectives in the original business case for
outsourcing should become living breathing parts of the suppliers'
day to day activities.
5. Making contracts truly win-win
Research shows that clients are most satisfied when their
outsourced supplier is earning its target margins. Make sure
you measure it, for the supplier's benefit, not to minimise their
Never considered outsourcing supplier relationship
MSM Software provides outsourced SRM by applying ITIL principles
to guaranteed SLAs. We take sole responsibility or take the
pressure off your team by adopting some of the routine and
repetitive day to day elements of supplier management, freeing up
your teams to focus on higher level strategic management of
suppliers. Hybrid working suits many overworked clients
needing to demonstrate rapid outcomes.