SRM: Process and the ‘Day Job’ – Part 2

This is the second part to yesterday's post by David Atkinson, ex CPO, SRM expert and Managing Director of Four Pillars Consulting.

“If you can't describe what you are doing as a process, you don't know what you're doing.” (W. Edwards Deming)

I find the quote above from Deming perfect, as it lays down a challenge to the CPO to think beyond high-concept, and get into the definition of what an SRM process needs to be for it to be successful for their organisation.

Yesterday we looked at SRM as routine practice. Understanding relationships, developing strategies, and pragmatically engaging suppliers in driving performance and value improvement. If you can describe SRM as a process to stakeholders, then it’s highly likely they really will be convinced that you do know what you're doing.

Having discussed relationship analysis and supplier engagement, we are left with value transformation. This is where supplier performance standards are already high, a steady stream of incremental improvements is routinely generating value, and now the focus shifts to product/service and process innovation. The aim is look at ways in which working practices between buyer and supplier organisations can be fundamentally transformed.

This is no longer about incremental ‘savings’, but radical thinking that could result in strategic alliances, outsourcing projects, and joint ventures. Relatively few supplier relationships will reach these dizzy heights, but CPOs and their teams should certainly remain open to transformative ideas from suppliers.

If you’re a CPO wrestling with making SRM a success, then let me suggest a few things to consider:

  1. Decide what information would aid the deepest understanding of the supplier relationship, and select analysis tools and standard templates to help you do that (Kraljic, Porter, Power, Perception Feedback, Supplier Corporate Strategy, etc.)
  2. Formally document the SRM process, ensuring that training materials include tools and templates. What you should be looking for is a repeatable, well-understood process
  3. Train and educate people in cross-functional groupings. The various analysis tools mentioned in ‘A’ might be used by Procurement’s category managers (albeit not always to ‘expert’ level), but they’re rarely familiar to stakeholders. This is why training and ‘learning by doing’ in cross-functional teams is such an important ingredient to embedding good practice
  4. Nominate SRM process ‘super-users’: people who you think can become supplier relationship management specialists as ‘internal consultants’, able to facilitate the process, and lead by example those cross-functional teams
  5. Ensure the supplier relationship managers command the professional respect of internal stakeholders, enabling them to sometimes lead more senior colleagues in relationship strategy development. Ensure the organisation’s senior management team visibly endorses their role
  6. If there’s doubt about specialist SRMs being able to carry out the role, don’t give up. Appoint more senior and/or experienced supplier relationship managers, on the basis that success in managing key supplier relationships is too important to leave to enthusiastic specialists. In other words, give the SRM role ‘teeth’.

In a future article, I will be saying more about how the range of analysis tools can be used, and how the different perspectives of each can illuminate the value improvement possibilities from the relationship beyond standard procurement practice.

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