I was recently approached by a client of ours, who was keen to develop his company’s approach to Supplier Relationship Management (SRM), which is the discipline of strategically planning for and managing all interactions with third party organisations that supply goods and/or services.
My client’s organisation is a leading retailer and, perhaps naturally, has been indirectly developing its procurement approach. As a result, my client’s brief is generally based on looking at what others are doing, how they’re organised and what their methodology is for managing suppliers.
It got me thinking….my client clearly needed to create an internal business case to convince senior management that investing in managing suppliers was the right approach to take. But was developing a process and structure the right starting point for him and would he achieve the right outputs?
It reminded me somewhat of the Hitchhiker’s Guide to the Galaxy by Douglas Adams. How many children (of a certain age) have spent many an evening immersing themselves in the deep fabrics of those books? Or maybe it was just me…
Reminiscing about those days aside, in one excerpt, the characters, Ford Prefect and Arthur Dent, are stood on a grassy hill talking about flying, having gone way back in time into a previous version of Earth.
“The Guide says there is an art to flying”, said Ford, “or rather a knack. The knack lies in learning how to throw yourself at the ground and miss.”
How many of us can relate to that thinking in so many parts of our lives?
You see, when I started to think about Supplier Relationship Management, this extract immediately sprang to mind. As a leading consultancy, Ayming has a well-established methodology and approach for all elements of the procurement end-to-end process. Supplier Relationship Management definitely forms part of this. Our approach is focused on keeping it simple and driving value from relationships, which is evident in our framework:
People and relationships matter
Follow an approach like this and you stand a much greater chance of getting it right. But, like Ford was thinking, it’s all very well having a process and an approach, KPIs in place, relationship governance, a segmented supply base and strong engagement – yes, these elements are vital, but the real key to all of this is people.
Supplier relationships don’t work unless the relationships between the people involved can be made to work effectively. Or, in Ford’s world, if we only focus on the process and the data, we’ll no doubt hit the ground in a huge heap. If we’re able to look away from just purely focusing on metrics and include people, then we stand a chance of flying.
Within Ayming’s end-to-end training structure (mapped out in the diagram below), we know that none of the elements of procurement are of maximum value unless we think about people. Supplier Relationship Management is quite possibly the most important part of the procurement process. In fact, you could say, that the main clue is in the title, ‘Supplier Relationship Management.’
Practising what we preach
We regularly implement what we teach in our training modules. Recently, one of our supplier partners, an organisation that we’ve been working with for a reasonable length of time, explained to us that it was facing some difficulties involving its ability to resource projects and underlying financials.
We could have talked about process, looking elsewhere for a more secure supplier or putting KPIs in place to drive the company forwards. But we didn’t, we focused on the people and the relationship. This was an organisation that had delivered great value in the past.
We recognised that while it may not have delivered so well recently, the organisation could deliver again, with some effort and help focusing. We worked with them and developed a plan that got their project back on track. Not only have we helped them to start delivering value again, but the loyalty on both sides has been strengthened and the company is expected to deliver well into the future.
The point is – process and systems, measures and methods are, of course, incredibly important. But if we really want to learn how to fly, just like Arthur Dent did, it’s important that we take a sideways glance and think about the relationships and people involved too.
If you have any questions or would like to find out more about our approach to Supplier Relationship Management or discuss your procurement requirements with us, contact us on 0203 058 5800 or firstname.lastname@example.org.
About the author
Jon Howell is a Director of Operations Performance. He has 28 years’ procurement experience and is based in the Ayming London office. His previous employers include KPMG, PwC and British Airways.
Want to discuss Supplier Relationship Management in more detail? Why not drop us a line?