How can you measure the success of your supplier relationship management?

1 SRM objectives and KPIs

To measure your SRM success, you should first define objectives and key performance indicators (KPIs) for each supplier relationship. These objectives should be in line with your business strategy and capture the value, expectations, and risks associated with each supplier. The KPIs should be SMART and cover both qualitative and quantitative aspects of the relationship. Examples of SRM KPIs are cost savings and efficiency, quality and innovation, compliance and risk, as well as satisfaction and loyalty. You should consider how much you have reduced your total cost of ownership, improved operational efficiency, optimized inventory levels, met quality standards, delivered on time, supported innovation initiatives, complied with contractual terms, managed risks, and gauged satisfaction with the relationship.

2 SRM data collection and analysis

The second step to measure your SRM success is to collect and analyze data from various sources to track and evaluate your KPIs. You should have a robust SRM system that integrates data from your internal systems, such as procurement, finance, operations, and quality, as well as from external sources, such as supplier surveys, audits, feedback, and market intelligence. You should also have a clear methodology and criteria for measuring and scoring your supplier performance, such as a balanced scorecard, a rating scale, or a benchmarking tool. You should use data visualization and reporting tools to present and share your findings in a clear and concise way.

3 SRM action and improvement

The third step to measure your SRM success is to take action and implement improvement plans based on your data analysis and insights. You should communicate your results and feedback to your suppliers and stakeholders regularly and transparently. You should also collaborate with your suppliers to identify and prioritize improvement opportunities, set realistic and mutually beneficial goals, and monitor and review progress. You should use your data and insights to inform your contract negotiation strategy and tactics, such as leveraging your strengths, addressing your weaknesses, creating value, and managing trade-offs. You should also recognize and reward your high-performing suppliers and address any underperforming or problematic suppliers.

4 SRM culture and maturity

The fourth step to measure your SRM success is to assess your SRM culture and maturity level. Your SRM culture is the set of values, beliefs, and behaviors that shape how you interact with your suppliers. Your SRM maturity is the degree to which you have developed and implemented SRM best practices and processes across your organization. You should evaluate your SRM culture and maturity using a self-assessment tool, such as a maturity model, a gap analysis, or a SWOT analysis. You should also benchmark your SRM performance against your peers, competitors, and industry standards. You should use your assessment to identify and address any cultural or organizational barriers or enablers to your SRM success.

5 SRM learning and development

The fifth step to measure your SRM success is to foster a culture of learning and development for yourself and your team. You should seek and provide feedback, coaching, and mentoring to enhance your SRM skills and competencies. You should also invest in training and education to keep up with the latest trends, best practices, and tools in SRM and contract negotiation. You should also leverage your network and community to exchange ideas, experiences, and insights with other SRM professionals and experts. You should use your learning and development to continuously improve your SRM performance and outcomes.

6 SRM review and adaptation

The sixth and final step to measure your SRM success is to review and adapt your SRM strategy and approach according to the changing needs and expectations of your business and your suppliers. You should conduct regular reviews and audits of your SRM objectives, KPIs, data, actions, culture, and learning to ensure they are still relevant, valid, and effective. You should also monitor and anticipate any internal or external changes or challenges that may affect your SRM performance, such as market shifts, technological innovations, regulatory updates, or supplier transitions. You should use your review and adaptation to adjust and optimize your SRM strategy and approach accordingly and proactively.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?