What are the key risks and opportunities in your supplier network?

1 Why SRM matters

Supplier relationship management is the process of strategically planning and managing your interactions with your suppliers, based on their importance, performance, and impact on your business goals. SRM helps you to optimize your costs, quality, innovation, and sustainability, as well as to reduce risks and increase opportunities. SRM also enables you to build trust, collaboration, and mutual value with your suppliers, which can lead to long-term partnerships and competitive advantages.

3 What to include in your supplier risk assessment checklist

A supplier risk assessment checklist is a useful tool for evaluating and monitoring the potential risks that your suppliers may pose to your business continuity, reputation, quality, compliance, and profitability. This checklist should take into account various aspects of your supplier network, such as their profile (background, ownership, location, financial stability, and certifications), performance (delivery, quality, innovation, and responsiveness), relationship (contract terms, communication channels, feedback mechanisms, and dispute resolution processes), and environment (political, economic, social, technological, legal, and environmental issues).

4 How to mitigate supplier risks

Once you have identified the potential risks in your supplier network, it is necessary to take appropriate actions to mitigate them. Diversifying your supplier base and negotiating fair and flexible contracts are two common risk mitigation strategies. Furthermore, monitoring and auditing your suppliers, as well as collaborating and communicating with them, can help ensure that their performance, compliance, and quality are up to your standards. Additionally, including clauses for risk sharing, contingency plans, and exit strategies in your contracts can help protect your business objectives.

5 How to leverage supplier opportunities

Besides managing supplier risks, you should also look for opportunities to enhance your supplier relationships and create mutual value. Innovating with suppliers by inviting them to share their ideas and best practices can improve efficiency, quality, and differentiation. Rewarding and recognizing suppliers for their achievements, contributions, and improvements is important, as well as offering incentives, bonuses, or referrals for exceeding expectations or standards. Partnering with suppliers by treating them as strategic partners rather than vendors can build long-term trust-based relationships that benefit both parties.

6 How to improve your SRM skills

SRM is a complex and dynamic process that requires analytical, strategic, interpersonal, and negotiation skills. To improve your SRM skills, you can learn from best practices by researching and benchmarking the SRM practices of leading organizations or experts in your industry or sector. Additionally, seeking feedback from suppliers, customers, and stakeholders on your SRM performance can help identify areas for improvement or enhancement. Investing in training and development through courses, workshops, or certifications can also help to acquire or update your SRM knowledge, skills, or tools.

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?