The Scope of Strategic SRM

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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.

Stop being monocular! My view is strongly that you need to change out-dated behaviours and demonstrate a willingness to become more transparent and cooperative with your primary Suppliers. Identifying what value exists over and above the contract by itself is not enough.  It also needs a change in behaviours to ensure that SRM initiatives proposed for improving the relationship between companies in that supply chain are implemented successfully including eight steps incorporating:

  1. Executive commitment and a willingness to change;
  2. Design of a comprehensive SRM model that has one clear and unequivocal goal – to deliver additional value for your Company and your partners in the new relationship over and above what has already been contracted;
  3. SRM Change Readiness Assessment that challenges and confronts the ability of your Company and your partners to deliver improvement;
  4. Agreement on a new Governance approach where executive sponsorship, roles and accountabilities, joint working groups and working together principles are agreed;
  5. Comprehensive Action Plan to deliver the new model and the value over and above what is contracted;
  6. Communication plan to reinforce commitments and communicate results;
  7. Training plan that is focussed on encouraging and reinforcing the right skills, competencies and behaviours to deliver an SRM programme over the long term; and
  8. Performance metrics that focus on the size and nature of the additional value to reinforce the ROPI.

Table Two: Integrated SRM Implementation Approach

The SRM Change Management Approach – Executive Commitment

It would be fair to say that few companies in Australia have successfully implemented a true SRM relationship as we have discussed.  I have researched the markets and there appears little real commitment and willingness for Australian companies to move beyond traditional contract management practices, potentially leaving billions of dollars of economic waste on the table.

To overcome this mistrust, the end goal in true SRM must be an environment where there consistently is mutual trust, understanding, communication and sharing of data and information (within the constraints of the Competition and Consumer Act 2010).   An open engagement approach between your Company and the Supplier is essential where change can be implemented with full and committed joint business teams.  This approach is demonstrated below:

Table Three: Change Management Approach for SRM

This executive commitment to change requires engagement between the two CEO at the very senior level and leadership team – without which any strategic SRM is doomed to failure.  With strong and committed engagement and the creation of a shared SRM vision, the design of an integrated SRM Model can be made by senior managers in your Company and Supplier, consulting and cascading the SRM goals and objectives quickly down the food chain.

Using a combination of the various surveys, whitepapers, and research published by many universities and other consulting organisations, I have developed an integrated SRM model that reflects this approach and incorporates all the key elements of successful strategic SRM.

Table Four: A suggested Best in Class SRM Model

Source: State of Flux 2017 – State of Flux SRM Model adapted for an Australian Mining Equipment Manufacturer

 

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