DSO 308 Supplier Relationship Management systems.pptx

Presentation of Supplier Relationship Management

1. 3.3 Supplier relationship management systems Prepared by Lilian

2. An Introduction Supplier relationship management (SRM) is the systematic approach of assessing suppliers' contributions and influence on success, determining tactics to maximize suppliers' performance and developing the strategic approach for executing on these determinations. Supplier relationship management is used by supply chain professionals involved in areas such as procurement, project management and operations where these professionals regularly deal with suppliers. SRM includes both business practices and software.

3. The definition of supplier relationship management can vary from organization to organization. However, the typical goal of SRM is to streamline and improve processes between a buyer and its suppliers -- the organizations that supply the goods and services -- just as customer relationship management (CRM) is intended to streamline and improve the processes between an enterprise and its customers. Underlying SRM is the focus on developing a mutually beneficially relationship with suppliers, especially those deemed as most strategic to the brand, to promote quality, efficiency, innovation and other benefits. Supplier relationship management has become increasingly important as buyer-supplier networks become more global and interdependent and companies rely more heavily on strategic suppliers. SRM practices create a common frame of reference to enable effective communication between an enterprise and suppliers and to measure supplier performance. One major benefit of supplier relationship management is the possibility of working with strategic partners to increase innovation either through process improvement, product development or both.

4. Keys to Successful Supplier Partnerships Building Trust With trust, partners are more willing to work together, find compromise solutions to problems, work toward achieving long-term benefits for both parties, &, in short, go to the extra mile.  Shared Vision & Objectives Both partners must share the same vision & have objectives that are not only clear but mutually agreeable. The focus must move beyond tactical issues & toward a more strategic path to corporate success.

5. Keys to Successful Partnerships…cont’d Personal Relationships It is people who communicate & make things happen.  Mutual Benefits & Needs Partnership should result in a win-win situation, which can only be achieved if both companies have compatible needs. An alliance is much like a marriage, & if only one party is happy, then the marriage is not likely to last. Commitment & Top Management Support Commitment must start at the highest management level. Partnerships tend to be successful when top executives are actively supporting the partnership.

6. Keys to Successful Partnerships…cont’d Change Management Companies must be prepared to manage change that comes with the formation of new partnerships. Information Sharing & Lines of Communication Both formal & informal lines of communication should be set up to facilitate free flow of information. Confidentiality of sensitive information must be maintained. Capabilities Key suppliers must have the right technology & capabilities to meet cost, quality, & delivery requirements in a timely manner.

7. Keys to Successful Partnerships…cont’d Performance Metrics Measures related to quality, cost, delivery, & flexibility are used to evaluate suppliers. Metrics should be:1) understandable, 2) easy to measure, & 3) focused on real value-added results A multi-criteria approach is best   Total cost of ownership (TCO), is made up of all costs associated w/acquisition, use, & maintenance of a good or service Continuous Improvement Making a series of small improvements over time results in the elimination of waste in a system. Buyers & suppliers must be willing to continuously improve their capabilities in meeting customer requirements of cost, quality, delivery, & technology.

8. SRM systems Supplier relationship management (SRM) software/system enables businesses to manage their relationships between their buyers and the outside suppliers and service contractors using digital tools. SRM software is often paired, or part of a supply chain management software application, since these SRM activities are a sub-section of that organization’s vertical product chain from raw materials to the retailers’ shelves. Below are the major SRM Software/system Suppliers . EcVision ( http://www.ecvision.com/ ) i2 Technologies, Inc.( http://www.i2.com/ ) Oracle ( http://www.oracle.com/ ) Acquired PeopleSoft in 2005 SAP ( http://www.sap.com/ ) SAS Institute ( http://www.sas.com/ ) SupplyWorks ( http://www.supplyworks.com

9. SRM systems Procurement and/or buyer personnel use SRM software to define resupply strategies, manage contracts, evaluate supplier performance, and establish strategic supplier relationships. Event management tools, such as email and text alerts and notifications, help minimize inventory shortages or over-limit stockpiles. Five key points of an SRM system: Automation Integration spans multiple departments, processes, & software applications. Visibility of information & process flows Collaboration through information sharing Optimization of processes & decision making

10. SRM systems benefits Some of the advantages that SRM software can provide for the organization are: Streamline and standardize the purchase of goods and services Shrink procurement costs by closing the loop from source to pay Automate operational processes to increase efficiencies and avoid rogue buying Drive user adoption with consumer-grade shopping interfaces Gain greater visibility into supplier relationships and performance Accelerate procurement processing and cycle times

11. Trends in SRM Sourcing & procurement are increasing in importance in organizations. They are becoming more strategic. More companies expect more cost reductions to come from their procurement functions. Staff is being reallocated from low-level transaction activities to more strategic & higher value-added positions Companies with effective transaction activities tend to reduce costs better & have strategic & automated systems