Supplier Relationship Management is vital, but many organizations still fall short in getting it right.
What are the common pitfalls in SRM? Join Trent as he shares valuable tips and strategies to improve supplier relationships and achieve better outcomes.
Check out the video below!
SRM often gets less attention than it deserves in the supply chain. While most organizations prioritize customer relationships, supplier partnerships are just as critical for driving long-term success. Effective SRM is more than tracking performance—it’s about building collaborative relationships that deliver mutual value.
Why Supplier Relationship Management is Crucial?
It ensures that supplier relationships are actively managed to create value beyond the basics. Without proper attention, these relationships can falter after the initial stages. Many businesses only focus on meeting KPIs, but this approach limits potential. Suppliers often have expertise and innovation to offer, and SRM provides the framework to tap into these advantages.
By fostering collaboration, SRM creates a “J-curve” effect where the benefits far outweigh the cost. Suppliers become more invested in your supply chain, delivering improvements beyond their contractual obligations.
Key SRM Mistakes
One of the biggest missteps businesses make is focusing solely on metrics like KPI compliance. While important, these don’t measure the strength of the relationship or the supplier’s contributions to innovation and long-term success.
Another common issue is poor communication. Strong supplier relationships rely on clear, consistent communication. An effective SRM framework includes regular meetings at different levels—operational, tactical, and strategic. These structured interactions ensure problems are addressed early and opportunities for collaboration are explored.
How to Evaluate SRM Practices?
Wondering if SRM is a priority in your organization? Start with your calendar. If regular meetings—both monthly and quarterly—aren’t scheduled, SRM likely isn’t being prioritized. Scheduling these meetings ensures accountability and signals to suppliers that their contributions are valued.
SRM is usually managed by procurement teams since it often ties into contract oversight. However, operations teams also play a role, especially in managing day-to-day performance like costs, safety, and KPIs. Strategic discussions require collaboration between procurement and operations to ensure alignment across all levels.
Making SRM a priority helps businesses strengthen supplier partnerships, improve supply chain resilience, and unlock new value. By focusing on communication, collaboration, and structured management, organizations can achieve far more than just operational efficiency.
Related articles on this topic have appeared throughout our website, check them out:
- 4 Tips for Effective Supplier Performance Management
- 3 Practical Metrics for Supplier Performance Evaluation
- Why 3PL Relationships are Fraught—And How to Manage Them
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated March 08, 2023, under the title “Supplier Relationship Management Tips“.
