How well do you know your suppliers? You probably might be able to identify their products, names, and key personnel. However, will you be able to describe your suppliers’ performance, risk management strategies, and supply chain dynamics in a nutshell?
How well you know your suppliers dictate the kind of relationships you have with them. According to experts at Gibson Consulting, 67% of leaders believe they have great risk visibility with their suppliers. However, only 31% can predict those risks in their supplier base. This finding is a wake-up call to improve supplier relationship management (SRM).
What is SRM?
It is an important component of the modern supply chain processes. In today’s business landscape, where supply chain processes have become interconnected and complex, it is vital to improve connection.
The process of SRM involves many activities focused on fostering beneficial and strong relationships with your suppliers. It also involves nurturing relationships with strategic suppliers, choosing the right suppliers, managing supplier performances, and establishing supplier strategies.
The Importance of Strategic SRM
With supply networks’ global impact, SRM is now becoming more important than before. Organizations that prioritized strategic SRM and sourcing during the global pandemic fared substantially well during those tumultuous times, illustrating how vital better management of suppliers is in the success of a business. By prioritizing strategic SRM, you are more likely to see the following benefits:
- Improved continuity of business
- Greater agility
- Minimized costs
- Greater visibility and transparency
- Improved quality of services and goods
- Greater innovation
- Increased productivity
SRM Components
Strategic SRM includes different components, which work together to guarantee a strong supplier relationship. These components include joint activities, technology systems, systematic collaboration processes, value measurement strategies, governance mechanisms, and organizational structure. All the components are important in building a successful partnership and ensuring effective communication between suppliers and buyers.
How to Have a Great Relationship with Suppliers
Paying your suppliers regularly doesn’t necessarily mean you are the only customer and have the power with you. The relationship should be symbiotic. You want suppliers to rely on you as a client just as much as you need them. That means you need to be flexible, reasonable, and fair. To achieve that, the following are strategies that can help you:
1. Set Reasonable and Clear Goals
When managing supplier relationships, the connection may become frayed. As a relationship manager, you need to share the objectives of your business before you work with suppliers to prevent miscommunications in the business relationship.
2. Have Effective Communication
Like good relationships, honest and open communications make SRM a difference. Keeping suppliers in the loop regarding your expectations, challenges, and goals will help encourage suppliers to share their plans openly and create mutual support.
As a vital part of supply chains, you must keep everything flowing smoothly and free from any hindrances. The game changer is to have a strong SRM put in place. For instance, if you want cost-effective and sustainable business growth, you must consider investing in close partnerships with your suppliers and getting over conventional means.
