The 3 Key Enablers for an SRM solution!

As the African Proverb goes ‘If you want to walk fast, walk alone but if you want to walk far, walk together’. The essence of this saying profoundly explains the rationale behind deploying a Supplier relationship management solution.

With organizations vying to maximize value from their procurement functions, an SRM solution seems to be the way forward. But Wait! Before foraying into a SRM solution implementation, it would be valuable to take a step back from SRM and assess what factors shall drive success for this initiative.

A strong value proposition for the organization

It is imperative to assess the long term goals of the organization and assess the need and fitment of an SRM solution with achieving those goals. If not already, then organizations will have to define and streamline those with a long term supplier strategy to leverage on supplier value in the long term. Therefore, it would be worth for the CPO to ask the following questions:

• Why does our organization need an SRM solution; is it an inside-out approach?
• Is the organization ready to embrace an SRM solution?
• Do we have aligned values between the organization and the suppliers?
• Are supplier information management and related processes effective?

Streamlined Internal Processes

This is one of the biggest challenges though as clichéd it may sound, that organizations still face. It is ironic that we talk of end-to-end digitization and state-of-art technologies whereas most of the organizations are still juggling with the ad-hoc and non-optimized nature of internal processes.

Having said that, an end-to-end optimized supplier process including on boarding, qualification, supplier risk and compliance and performance assessment should be clearly outlined using supplier management solutions best suited to your organization.

Supplier Performance Metrics

It would not be an overstatement to say that organizations do not tend to define clear and standard metrics to assess suppliers. In fact, on an average only <25 % of an organizations’ suppliers are actually assessed. So as a stepping stone to deploying an SRM solution, it will be of value to the organizations to clearly define performance metrics along with requisite weightages attached.

With the metrics defined, conduct a regular assessment of the supplier performance by preparing effective performance ‘Scorecards’. Scorecards can be used to capitalize on both quantitative and qualitative information, with inputs from internal and external systems and individuals.

An effective supplier performance assessment would give a clear view of which suppliers are worth collaborating with in the long term and also tracking supplier performance progress and providing insights into optimizing supplier relationships through a supplier feedback.

If you would want to understand further around solutions for maximizing your supplier value, please feel free to contact us!