Why Supplier Relationship Management is Important.

Procurement is not just choosing suppliers and making deals. The most important aspect of many successful businesses is how well they work with suppliers. Supplier Relationship Management (SRM) plays an increasingly important role for business strategy today, and supply chains.

It isn’t always the case for everyone in procurement. Many businesses still think procurement in very transactional terms, buying and selling in specific instances. However, many companies now have suppliers as strategic partners. Relationships are very important and not just about individual sales.

Communication and Working Together. Working together with suppliers is very important. Suppliers and customers should share ideas about things like the product, delivery, and what they can do to help each other.

Supply Chains and Deliveries. Reliable supplies are always a good thing, because you can plan ahead and meet customer needs. Supplier Relationships also help improve reliability and transparency. Companies that build trust are more prepared if a supplier is in trouble.

Improvements and Ideas for Suppliers. Suppliers always have ideas, because they are experts. If companies work together, they can improve what they have and do things even better than before.

Supplier Performance. You need to keep an eye on suppliers and measure how they perform. It is important to measure quality of supply delivery (quality, delivery, responsiveness, cost). Supplier Relationship Management should also ensure that suppliers are improving and keeping up with the rest of the business.

Risks. Supplier relationships are important, and risks in supply chains may be the result of a supplier’s finance, supply chain, delivery, regulations, etc. Strong relationships with suppliers also mean that you can manage risk more effectively. It also means everyone is in the same position, and everyone is prepared to do something if a problem occurs.

Cost and Benefits. Of course, you need to find the most cost effective supplier for the work you do. But other things are becoming more important. Quality, innovation, flexibility and responsiveness are more important now, which can help the business in the long-term.

In short, businesses today should work together with their suppliers in order to have a sustainable future, where everyone wins together. In the future, the supply chain is only going to be more complicated, so being able to have strong supplier relationships will only be more important.