Supplier Management Moves To The Top of The Procurement Agenda

Daniel Ball, business development director, Wax Digital, explains why SRM is becoming more important than ever.

Traditionally, businesses have come to market for eProcurement technology for a variety of reasons. It could be because they’re looking to embark on a digital transformation project, or because they want to better control maverick spend and achieve greater transparency over all procurement activities.

However, there’s been a shift in procurement’s objectives, and today, the main reason we see businesses adopt eProcurement technology is to achieve one specific goal, and that’s to gain better visibility and understanding of the supply chain and improve supplier relationship management (SRM).

The disastrous collapse of Carillion acted as a stark reminder to us all of the societal and reputational impact of business failure. It was a massive wake-up call for business leaders and the ramifications of its demise are still being felt across the UK, leaving many public projects at a standstill and with an uncertain future.

When things go wrong for a business, particularly a well-known one, it soon becomes public knowledge. As a result, most businesses today have a much keener perception from both an operational and reputational perspective of what parts of their business are at risk.

The supply chain is clearly one key area of the business that remains a management challenge as procurement professionals and supply chain managers are reliant on their suppliers to fulfil their side of the arrangement. We all witnessed a high-profile example of supply chain disaster earlier this year as chicken supplies ran out at KFC, forcing the fast food chain to shut its doors while it resolved its delivery issues at a huge cost to the business.

Research from the Cranfield School of Management and data analysts, Dun & Bradstreet also shows that businesses are becoming increasingly focused on supply chain risk over fears on what Brexit will mean for their businesses.

The reputational and operational impact of a supply chain disaster, alongside so much uncertainty of around Brexit is encouraging many businesses to get their own house in order and obtain a clearer view of all supply chain activity and spend.

It’s not that businesses don’t already have some supplier relationship management measures in place, it’s just that often, they only cover the very top tier of the supplier list, and even then, they are typically managed by multiple stakeholders with little or no consistency of approach or measurement.

Today, supply chains are becoming increasingly complex and global, and managing each tier of the supply chain has become a huge challenge. It’s more important than ever to understand the likelihood of supply chain risk, and to have visibility of it, so any potential issues can be identified and resolved before it causes serious disruption.

Many businesses are still doing Supplier Relationship Management manually by using Excel or paper-based systems and this reliance on non-centralised processes can be difficult to manage when scaled across a complex supply chain. Multiple inconsistent views of suppliers and related processes are being created which are ultimately, hampering full supply chain visibility.

Organisations are recognising that technology enables this level of strategic SRM. Many procurement professionals may already be using technology for sourcing and purchasing with suppliers so taking advantage of eProcurement’s SRM modules should be considered as the next natural step.

SRM allows procurement to manage every process from supplier evaluation through to on-boarding and ongoing performance reviews. It offers a joined up and more accurate view of individual supplier’s information, performance levels and relationship management activities so you can have a clearing understanding of all your suppliers. It can also automatically help manage supply chain risk by delivering a real-time vision of supplier KPIs and potential supply chain issues.

No business is immune to supply chain problems but there are steps that can be taken to minimise many types of risk from natural disasters, extremes of weather, suppliers going bust or not delivering as promised. With Brexit looming and businesses only too aware of the potential repercussions to the share price and the business reputation if operations do come to a grinding halt, the time is right to take back control of the supply chain.

 

Disclaimer: please note the opinions in this guest post are those of the author and not necessarily the official position of Spend Matters.

 

First Voice

  1. David Atkinson:

    It’s refreshing to see the case for SRM being made again. For too long most of the noise in our profession has been made by those promoting tech solutions to speed-up, or improve, the efficiency of procurement operations, when we should be focusing on what makes us effective in bringing tangible value improvements to our organisations.

    In addition, front-end sourcing and deal-making has similarly attracted huge attention, as it must – but not at the expense of ensuring that contract value doesn’t leak, or additional value is captured post-contract. Just yesterday I posted a short blog and video arguing the same. See here:

    https://www.linkedin.com/pulse/procurement-matters-srm-big-opportunity-david-atkinson-fcips/

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