The Orchestra of SRM

Jonathan O'Brien, CEO, Positive Purchasing Ltd gives us a taste of his new book: Supplier Relationship Management, Unlocking the Hidden Value in Your Supply Base. 

Ask a procurement professional what “SRM” stands for and they will most likely answer “Supplier Relationship Management.” Ask what SRM is, however, and the chances are you will receive different explanations depending upon to whom you talk.

SRM is a much-used term, but one that seems to be used to describe a multitude of different supplier interventions, all serving different purposes. For some, SRM means managing those suppliers that are important to us in some way. Perhaps this might include some performance dimension and even managing how a supplier might make agreed improvements. Others might describe SRM as an approach to working closely with the critical few suppliers that are of strategic importance to us—suppliers without whom we will struggle to operate or who hold the potential to add significant value to our business and brand. Others still might point to the entire supply chain beyond our immediate supplier and that might need intervention too. So what is SRM? Well, it is each of these things, some of these things and all of these things.

One of the challenges organisations face is being able to determine the right interventions with the supply base, and then having the resources to enact them. Irrespective of how we interpret SRM, if we view it as ‘just one thing’ then this mindset will limit possibilities and hinder our ability to unlock value from the supply base. I frequently come across companies that have applied a rigid set of supply segmentation criteria to determine supplier groupings which then dictates a series of interventions such as regular reviews, establishing scorecards, managing improvements, joint improvement workshops and so on. These interventions may be helpful, but if they demand a small army to maintain all the different forms of supplier intervention then it is doomed to fail or fall short.

SRM is in fact an umbrella term. It is all of the forms of intervention with suppliers and the supply base but applied selectively, according to degree and nature of importance of a supplier or supply chain.  It sounds obvious but making this happen in practice demands a shift in mindset and this is where the metaphor of the ‘Orchestra of SRM’ can help.

In the same way that a real orchestra has many sections (brass, woodwind, percussion and so on), the orchestra of SRM also has many sections: supplier management, performance measurement, supplier improvements, supply chain management and strategic collaborative relationships. Each section ‘plays’ according to the piece of music. Sometimes only one section plays, sometimes more than one, and there are times when all play together in unison to create beautiful music. Sections take the stage when they are needed and then go quiet until needed again. Who plays and what gets played is dictated by the music and just as every piece of music the orchestra plays is unique, so too is each scenario for a supplier that is important in some way. It is the supplier segmentation process that composes the music. In this framework, interventions are determined according to the degree and nature of supplier importance.

An orchestra needs players, selected according to their musical capability, instruments and a place to practice and play. An appreciative audience is essential if the orchestra is to have any future. Similarly, in an organisation, SRM must be a corporate initiative, with executive remit, and be properly resourced and supported.

Finally, it is the conductor who enables the orchestra to play in unison and who ensures the right tempo. Good leadership, direction setting and management of the overall SRM effort is critical to ensuring everyone is working in concert, driving the right interventions with the right suppliers at the right time. With the orchestra of SRM ready, the concert can begin and the audience can sit back and appreciate the melodic sound of great value being unlocked from the supply base.

You can read more about the orchestra of SRM and other aspects of Supplier Relationship Management in Jonathan O’Brien’s new book Supplier Relationship Management.

First Voice

  1. David Atkinson:

    I would have thought that it was the overall business/organisation strategy that ‘composes the music’, whilst segmentation ‘merely’ addresses the programme; i.e. which pieces are to be played in the specific performance.

    (Don’t mess with a muso) 😉

    Anyway, it’s always good to see pieces that help promote the advantages (and necessities) of deploying professional supplier management.

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