In a four part series, Trevor B Cameron, Mgmt., MBA(Distinction) explores a 21st century approach for strategic supplier relationship management (SRM). In part one he examined the archaic definition of SRM and the strategic view of SRM. Part two explored the potential value add in strategic SRM. In part three Trevor explores the scope of strategic SRM and how to approach change management. And in part 4 he advises how to conduct a change readiness assessment to determine the culture, the current views and perceptions on the proposed supplier partner.
SRM Change Readiness Assessment
The new SRM Model should provide you and your CEO with clear direction and potential goals. However, before any full implementation, I would strongly recommend that you conduct an internal Change Readiness Assessment – to determine the culture, the current views and perceptions on the proposed supplier partner, and the current and required behaviours in your Company and the Supplier that are associated with creating a new SRM approach. With a different way of working with the supplier, the CEO will quickly identify challenges and extent of change required and will also be able to implement strategies to compliment that change programme.
By assessing the degree of change required, the CEO can evaluate the resources and other costs associated with this type of programme against the additional value that must be delivered over and above your Contract. An example of a Change Readiness assessment is shown below;
Table Five: SRM Change Readiness Assessment – Example
|The Change Required||Current State||Future State||Mitigating Strategies|
|SRM Relationship Governance||We are Reactive, historical behaviours constrain relationship, no leadership, confrontational, costly to manage, no relationship structure
|We need to be Collaborative, Commercial, increased trust and respect, Long term goals and objectives, work together, strong Governance structure established with clear roles, accountabilities, targets to deliver additional value
|We will engage at all levels in our Company, implement a best in class Governance structure, conduct training on roles, define clear accountabilities and deliverables, implement wider communication, top down and bottom up commitment|
|Commercial||Disputes with our Suppliers are costly, increasing supply chain risk, and debilitating our customer service and performance||We need a sound commercial base, a best in class contract with clearly defined deliverables, all costs are agreed, with supporting guidelines and FAQ sheets
|We will engage positively and openly with our top Suppliers, we always look beyond the contract to identify what added value can be achieved, we can create guidelines to help us deliver that value, FAQ sheets, communication plans, and we will seek greater commitment from Staff in both Companies
|Quality disputes||There are too many Quality complaints, and we are reactive to our customers and Suppliers||We want to target zero complaints, because this creates the best cost high quality goods and services. We will have integrated QA model with our top Suppliers as this quality can contribute to Supply Chain competitive advantage
|We can agree QA Principles, seek alignment on QC standards, we will focus on Customer not blame and conflict, we will implement a joint quality team and constantly seek improvement, to contribute to competitive advantage
|Sharing information, experiences, and key Objectives||There is inefficient cooperation, information is not shared, actions are misconstrued, defensive, lack clarity, no trust or respect, we have evidence of the bull whip effect which results in higher costs
|We can share information, create an integrated supply chain minimise costs, inventory, risk, information is always accurate, good decision making, we are ahead of disruption, and our data sharing enables one-truth and supporting growth||We must implement openness, collaboration, spirit of working together, information and actions are trusted, alignment, working together to same goals and objectives, invest technology and capital where necessary to integrate further and value returned through ROI
|Deliver what is Promised||We have a constrained approach, our procurement and supply actions are sometimes vague, we are often late and are reluctant to make commitments||We can deliver on time, honour one hundred percent of our promises, there is always trust and commitment in dealing with our top Suppliers, we have better alignment, more efficient, accurate documentation, first time right, and our logistics is customer focussed and integrated with partners
|We will create a joint CI team that focusses on integration activities, best in class approach, be innovative, seek logistics partners, single view of supply chain, low inventory still delivers|
|Profitability||We have low margins, high costs, mistrust of cost models, disputes over costs, little innovation, don’t share, continuous improvement and we are not collaborative||We want to have best cost, high quality, delivered right first-time products and services that creates supply chain competitive advantage, our top Supplier partners share benefits including profit and growth in market share for existing and new products||We will create a joint CI team that focus on costs, growth beyond current contract through more efficient service better cost to customers, acknowledge technology changes and disruption, seek to be ahead of curve, increased new product development and optimisation of supply chain, Training and communication critical
SRM Action Plan
The CEO is still left with the greatest challenge – How do we translate these aspirational targets and ideas into reality? The State of Flux in its 2017 report ‘Entrepreneurial SRM: Solving the Puzzle’ acknowledges that the initial engagement with your Supplier partner and development of a realistic action plan is one of the critical components in delivering on the aspirational additional value beyond the contract. It is this step where trust and respect is gained between customer and supplier.
“SRM needs to engage. Getting suppliers on board is also vital to achieving the benefits its advocates promise. Suppliers will need to buy into any new measures of their performance or plans to achieve greater value from the relationship.”
State of Flux
An example of an approach to the action plan is shown below. These steps must be translated into a well-defined jointly agreed plan between your Company and the Supplier, with clear Governance, goals, objectives, roles, accountabilities, tasks, and supporting administrative steps – in much the way a military battle plan might be produced, documented and communicated to the action teams.
Table Six: Action Plan for SRM