Benefits of Supplier Relationship Management (SRM)
Supplier relationship management is one of the most critical responsibilities of any CPO. A well-defined supplier management strategy can significantly enhance business relationships and help to create a transparent supply chain. Since suppliers are a virtual extension of every business, getting it right is vital to avoid disruptions or delays in the supply chain and improve profitability. We’ll go over some essential aspects of supplier relationship management and what you can do to level up this core business process.
What is Supplier Relationship Management (SRM)?
Firstly, let’s understand what Supplier relationship management (SRM) is. Supplier relationship management is the systematic approach to assessing a suppliers’ contribution to the success of an organization and developing strategies to improve their performance. SRM aims to develop mutually beneficial relationships with vendors to achieve more significant innovation and competitive advantage. A good supplier relationship management strategy must have three essential steps. It starts with segmenting suppliers based on their contribution to your success and identifying opportunities and risks. Once you have segmented your suppliers, develop a strategy to interact with them optimally based on your business goals. Finally, execute the strategy in the best way possible to get expected results.
Benefits of supplier relationship management
Open discussions with your suppliers not only help you build a transparent supply chain but also enable you to identify opportunities to optimize your cost of goods and services. Such opportunities may include inventory optimization using just-in-time techniques and evaluating alternative components.
Improved lead times
Optimizing supplier lead times is critical to ensuring the best possible service levels for your products in services. Even slight delays in lead times can halt your production process and may even result in lost business. Keeping communication channels open with your supplier can help you plan for potential delays and circumvent issues.
Making your purchasing process as smooth as possible is critical to your success. Technological advancements, including blockchain, EDI, and cloud computing, have paved the way for more accessible information exchange between businesses. When information flow between your business and suppliers is seamless, decision-making becomes significantly better and quicker.
Consolidation of the supply chain
Every business has unique processes and operations depending on its goals and strategies. As businesses work together, it allows both parties to understand the internal workings of the other better. Often, vendors will be willing to accommodate and adapt to your processes and needs, leading to increased operational efficiency. Consolidating the supply chain offers significant benefits, including reducing the number of suppliers, streamlining the purchase process, and simplifying budgeting.
A carefully thought and well-implemented supplier relationship management strategy offers several advantages to any business, from increasing operational efficiency to improving the bottom line. Whether starting with an SRM strategy or improving your existing strategy, it plays a crucial role in increasing supply chain transparency and growing your business. AccelGrid offers an end-to-end SRM and procurement solution that can help you simplify supplier relationships management, automate procurement activities and optimize your supply chain. Start a free 14-day trial today or contact us to learn more.
Share this post
Recent posts from our blogs
Find out how IoT inventory management is paving the road for a significant transformation of warehouses and helping businesses improve inventory performance.