Supplier Relationship Management is defined as follow by the
Gartner Group: "the practices needed to establish the business rules,
and the understanding needed for interacting with suppliers of products and
services of varied criticality to the profitability of the
enterprise". Other definitions summarize SRM as the next generation of
e-procurement or integrated solution which bridges product, development,
sourcing, supply planning, and procurement across the value chain.
We are going to adopt a marketing approach toward Supplier
Relationship Management, meaning that SRM must attract, filter suppliers, and
promote the company needs. As a matter of fact, SRM needs to support the entire
supplier relationship lifecycle.
SRM must attract new suppliers as in our knowledge and global
economy, it is becoming more and more difficult to find the best supplier. SRM
must also help to acquire new suppliers by doing business with them. As working
with the best suppliers is key to maintain a competitive edge, SRM must help to
retain the best ones. As ending a contract with a "bad" supplier is another
filter, SRM must help to track the rejection of termination of contract
The main goal of SRM is to achieve the better purchase by
supporting and developing the suppliers understanding. Consequently, companies
should gain the following competitive advantages:
- Increase satisfaction of goods and services purchased and
speed up product development by promoting a shared knowledge of suppliers and
alternative technologies.
- Increase supplier's satisfaction to attract and retain the
most competitive ones.
- Lower prices for purchase and maintenance of goods and
services by improving business processes across the supply chain.
Technical integration is another key requirement of SRM
solutions implementation. Software companies often propose the integration of
both supplier's CRM and buyer's SRM. As a matter of fact, this synchronized
integration should develop the relationship and the speed of information
exchange. However, we must keep in mind that prior actions need to be conduct
before that. First of all, the company must find the proper supplier, perform
some check or investigation, and discuss the product specifications. At this
stage of implementation, the SRM solution does not need integration with the
outside. The company needs to collect its internal sources such as procurement,
sales or marketing before calling for information from the outside. As a matter
of fact, in very competitive market, suppliers are often changed and it is very
difficult to keep information up to date.
1.1 The Technical enablers
The basis of any SRM solution is a common supplier repository.
When this repository works, it can be used for reporting, analysis tools.
- Content management and document
management: the documents available can concern products and services.
They can also cover the infrastructure such as building, factory and all the
goods purchased or needing maintenance.
- Knowledge management: As the field knowledge
of a procurement officer is its key asset, the experience sharing can lower
training time. Consequently, it can impact the procurement performance.
- ERP integration: links the existing ERP and
legacy system with the SRM functionalities. Integration is the key element for
a proper SRM
1.2 Customer service and support: SRM support
functionnalities
SRM products support the company relation with its suppliers
in order to provide the best quality and most suited services to its customers
at the lowest cost. That is the reason why SRM helps to collect and manage the
information from all departments. For instance, identified product issues can
be reported by the call management unit, which updates the supplier repository.
The procurement officer is automatically informed and can contact the supplier.
Then the product line can be adapted and the product design modified in order
to solve the problem. With regard to supplier selection, this problem tracking
is highly valuable as the supplier corrective actions will be considered.
.
- Call management:
SRM focus on the calls which are made to suppliers. The
system ensures that a call for information or maintenance is followed until the
end of the process. Call management is not restricted to the purchase officers,
it can be used by every employee of the firm.
- Field service and dispatch:
In the case of maintenance the action of production and
responsible users must be coordinated. That is the reason why the concerned
employee must have granted access to specific information such as warrany,
product specifications...
- E-Service:
Call management, Field service and dispatch can be accessed via
the web and need the appropriate support
1.3 SRM and Purchase:
One of the SRM goal is to achieve the automation of the sales
force, meaning that it must help to improve the efficiency by reducing time and
cost of sales. Electronic catalogues, auctioning and electronic request for
proposals (RFP) were the last evolutions since the 70's. ISRM which,integrates
these tools and the other procurement activities (e. g product design, product
development) imposes itself as the natural evolution.
- Purchase assistant:
It manages bids and assists in the creation of the Request for
Proposal and requirement description.
- Opportunity Management System:
The identification of the company needs is key to the company
activities and that is the reason why they
must be tracked from their
identification to the actual purchase. They can concern product improvements
or
completely new products and services. Consequently, SRM must enable to
prioritize the needs and to track
their moves along the cycle. It can also enable to report the
activities and to manage the workflow in order to automate the paper flow.
- Purchase configuration system:
After the identification of the product or service need,
comes the design, the writing of specifications, the description and the
definition of the actions to be taken such as the financing, the best
combination of suppliers or the estimation of the price
- Partner Relationship Management:
As most of the suppliers depend upon their own suppliers
performances, partner relationship management is key to the success of both
players. That is the reason why providing the right support to your supplier
can increase its performance and consequently reduce your costs. In that
partnership perspective, the smaller companies are enabled to offer joint
products and services through consortiums. Keeping track of relationships with
its own suppliers and its suppliers' suppliers allows to identify problems or
potential improvements. As well as the relationship tracking, the assistance in
planning, recruitment, training, certification, lead management and channel
market help the partner to improve its efficiency and service.
- Interactive purchasing systems:
The definition of standard acceptance criteria and dealing with
standardized goods, allows to automate the purchase decision using an
auctioning process.
1.4 SRM and Marketing:
Marketing is at the center of any sales strategy. To many
purchase officers, the best warranty for a successful purchase is the number of
suppliers in competition. By promoting its needs through the use of marketing
techniques (single, multiple-channel campaigns) a company can attract as many
suppliers as required. Company directories can also be used, but automated
tools to search on the Internet for suppliers are now emerging .
- Campaign management system:
The search for suppliers must be pro active as simply waiting
for the suppliers to come is not efficient. Suppliers also need to be attracted
through the use of communication channels such as electronic publication,
newspaper, newsgroups and marketplaces. It is also necessary to know the cost
of these tracking sources. Furthermore, it is essential to target the best
suppliers.
- Telemarketing: After the identification of potential
suppliers, the purchase officers get in direct contacts with them in order to
collect additional information. The information collected can even lead to the
modification of the needs or product reshaping. Then, these information can be
shared among the employees of the company. The system can also keep track of
contacts.
- Web measurement tools:
Web based purchase system such as auction or RFP must be
measurable. Identification, the users profile and how they use the system must
be known in order to measure the efficiency of the Web based purchase
system.
1.5 Conclusion
The underlying philosophy of SRM system is the better
understanding of the supplier by collecting and aggregating information from
various sources (e. g purchase officer, marketing, R&D, service and
support, maintenance). Consequently, companies are allowed to identify the best
suppliers and therefore help to improve the company performance. From that
internal perspective, SRM should be seen as a complement to the buyer's CRM.
In order to gain maximum profit from Customer Relationship
Management (CRM) and SRM, both systems need to be integrated. As a matter of
fact, customer and supplier's data sources are sometimes the same. In addition,
CRM systems, which collect customer information, also provide data about
supplier's product or service quality. SRM systems collect supplier's customer
information and customer satisfaction studies, which can complement the CRM
systems. Consequently, integration should avoid redundant information and
ensure that the widest range of information sources is covered. We can conclude
that maximization of the information flow can be done though the integration of
both CRM and SRM with the major company information systems such as ERP.
