MASTERING SUPPLIER RELATIONSHIP MANAGEMENT - SUPPLIER RELATIONSHIP MANAGEMENT AS A PHILOSOPHY:

I had the good fortune of working for world class industrial manufacturing, FMCG companies and aviation industry in different countries throughout my career, a company for whom supplier relationship management has been embedded in their way of working from day one.

In a very real sense, there are only two roles in organizations: customers and suppliers. Everybody functions simultaneously in both roles, whether inside or outside the organization the essence of good business, therefore, is the quality of the relationship between customer and supplier.

I was always amazed at how far the suppliers would go to willingly problem-solve, seek better ways of doing things, and provide additional value to these companies. This positive environment was fostered because of the mutual trust and respect with which these highly SRM oriented companies treated its suppliers.

Each function that interacted with a supplier did so in a collaborative way, rolling up their sleeves irrespective of their corporate position to solve problems. Every member of the supply chain from different domains, ever different team’s team lived and breathed this philosophy. It was ingrained organization-wide.

This statement sounds far-fetched, but it's actually true. And thousands of companies have tried to replicate this same philosophy over the years, but without success. You see, SRM is often mistakenly understood as solely a procurement activity.

On the surface, this seems logical, as, after all, it's procurement who are the interface between the business and the supply base dealing with the suppliers daily.

And as we've already learned, it's procurement's role to satisfy the needs of the business through sourcing the right suppliers, which are, in turn, linked to delivering the overall strategy of the business. But if we want to deliver a significant positive impact on our business, while SRM can be coordinated or led by procurement, we have to bring SRM to life across the whole business.

Without the actively involvement of the wider business: engineering teams, R&D, and marketing teams, for example, well-intentioned procurement folks may well set about driving a few supplier initiatives that are just too narrowly focused. This approach will fail to get the support of the business to implement them, and doesn't move the needle from an impact perspective.

#.In this case, the full potential of the value that sits in the supply base may never get realized.

• Customers are better informed,
• Better connected, collaborated and coordinated and, therefore, more powerful than ever before.

And they expect your business to bring better products that satisfy their needs to market quicker, more cheaply, and in a more sustainable way. Based on these growing demands from customers, just for your business to remain relevant, let alone grow revenue and market share, it requires a response from the whole organization acting cohesively.

And the penny has probably already dropped with you, and that's why you're taking this course, right? But the supply base has a key role to play. If the whole business is bought into achieving the corporate mission and understands that internal capability alone isn't going to get you there, it should be logical to feel a sense of urgency about harnessing the value that suppliers can bring.

It should be everyone's job. Well, pretty much. So with this in mind, you can now see why SRM needs to be a philosophy that permeates across the entire organization, coordinated and planned to extract further value from the supply base, to address consumer needs, not just now, but also in the future.