In my view, supplier relationship management (SRM) is a word that ERP vendors have bastardized to fit their description of procurement, sourcing, visibility, and contracting applications. This is a shame because in my view, supplier relationship management is not a category of solutions -- or an alternative phrase used to describe the Spend Management sector. Rather, it refers to the critical, continuous practice of effectively and proactively managing one's supply base. In a recent report on the subject, Accenture defines supplier relationship management "as the systematic management of supplier relationships to optimize the value delivered through the relationship over their life cycle." You can read the highlights of this report by opening the virtual pages of Supply Management, but here are some of the better tidbits from Accenture's SRM study findings based on their survey of 229 procurement executives worldwide:
"Supplier relationship management leaders can realize a threefold increase in benefits. Supplier relationship management leaders achieved savings of 3 percent on their total annual procurement spending from supplier relationship management activities, whereas all respondents achieved 1 percent. This translates to average benefits of €67 million (US$79 million) and €18 million respectively for supplier relationship management leaders and all respondents."
"There is a supplier relationship management skills gap. Supplier relationship management requires supply chain skills that appear to be lacking inside and outside of the procurement department. This is illustrated by the fact that supplier relationship management leaders consider the most important activity to be monitoring supplier performance, yet only 15 percent consider themselves to be experts in this activity."
"Supplier relationship management leaders use collaborative technology. Supplier relationship management leaders demonstrate higher levels of technology adoption across all functional areas of procurement technology. The difference between the supplier relationship management leaders and all respondents is greatest for contract management, business-to-business integration/collaboration and e-sourcing."
"There are industry-specific differences. Among the global survey population, the greatest percentage of supplier relationship management leaders were found in media and entertainment (50 percent); automotive (38 percent); and pharmaceutical, medical products and health (32 percent). The lowest corresponding percentages were found in property and facilities management (0 percent); banking and insurance (5 percent); and industry and manufacturing (8 percent)."
Kudos to Accenture for carrying out this research. It's a good piece of work, and worth spending some quality time digging into on your next flight. Now if only we could convince the firm to train its consultants what incoterms are, I might feel better about recommending them as a strategic Spend Management advisor. Alas, I'd wager that Accenture's research organization -- which puts out these reports -- is separate from its field organization which actually does the client work.