Mistaken identity
“SRM in identity crisis?!” I hear you cry.
This is what I was told last week. A little melodramatic you may think, but not without grounding.
A study passed exclusively to SM exposed the deeply fragmented definitions of supplier relationship management (SRM). Who knew procurement could be so divisive?
Some view SRM as traditional contract and cost management, while others see it as a means to manage cash and drive innovation. It certainly makes an intriguing story, but it is not entirely surprising.
SRM should not be defined by pre-determined parameters, but by the supplier relationship itself. Different needs should dictate how a partnership is managed to foster innovation, savings and everything else you would associate with a healthy, profitable business bond.
Sure, good practice is transferable, but only a buyer and supplier can set out these boundaries and it explains why definitions of SRM are so dispersed.
Read our feature on SRM here.
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Jake,
The studies conclusion is not surprising as SRM is largely underdeveloped even in leading organisations.
Reality is, that both views reflect different aspects of SRM.
The contract management view is ‘tactical SRM’, whilst the ‘innovation’ view is ‘strategic SRM’. Companies need skills and processes in place to manage both.
Unfortunately, many companies are stuck in the former mode and miss the real value that can be gained from a more strategic approach.