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 four he advises how to conduct a change readiness assessment to determine the culture, the current views and perceptions on the proposed supplier partner.
This fifth and final part outlines the importance of delivering a training and communications plan to ensure everyone has the right skills, knowledge and understanding to implement the new SRM model.
A Training Plan ensures that the strategic importance of SRM activities is acknowledged and that all people in your company and the supplier have the right skills, knowledge and understanding to properly implement the new SRM model and the highly collaborative relationship. It is essential that key staff in your company and the supplier actively participate, understand the real spirit of a collaborative approach, and the tools that we need to be successful. Training should occur in:
- Executive leadership Workshop – Leading SRM Change, the Governance approach in a new relationship
- Contract Management – managing commercial issues, basic ingredients of contracts, relevant case law and process law, and obligations under contracts, innovative dispute resolution approaches – the CLM approach. Managing an SRM relationship beyond the Contract itself;
- Supplier Relationship Management – the model with best in class case studies, and the detail on the new SRM Model;
- Effective Communication plans – the right SRM messages and responses required for the Relationship to work;
- Teams are Better Working Together – Joint Working Groups in Commercial, Marketing and Operations, with associated charters, concepts, targets, value; and
- Quality Control – Agreed joint QA Principles, implement improved QC, testing and grading.
Finally, a clear Communication Plan is needed to ensure that the positive SRM messages that are delivered internally in your Company and the Supplier, as well as externally to the markets, are accurate, targeted, managed and effective. The Communication Plan internally must focus on the reality that additional value and competitive advantage (and ensuing profitability) can be delivered through a new open and collaborative Supplier relationship. While externally the focus will be on the integrated supply chain that will deliver the best quality, best product right first time – and this can only be achieved by your Company working closely with its key partners in the supply chain. An example communications approach is shown below:
I know that this is a comprehensive model and some Procurement Practitioners and Companies will baulk at the prospect – good luck to them. However, the benefits are palpable! The additional value is there and all you need to do is go and grab it!
Of course, the successful implementation of the proposed SRM Model, and effectively managing the associated SRM change management activities is reliant on willing ‘People’ to actively participate and support. There will also be significant challenges for some stakeholders (luddites) to see how the new SRM Relationship is essential for your Company to achieve its strategic objectives relating to growth, innovation and most importantly to target and deliver additional value over and above the supplier contract. However, that value can be released by strong leadership who supports an open and collaborative culture, and a well-planned and well-executed team.
My consistent message to all parties is that the development of a best in class SRM strategy and Model, supported by strong leadership and a clear vision will support the opportunity for both companies to focus on delivering an integrated and highly competitive supply chain, with the SRM Plan dependent on:
- Strong executive leadership and a clear definition of the target value that is over and above the normal contract;
- Implementing a new style of structured supplier governance with collaborative teams, guidelines and principles, communications and training that ‘add to, but do not take precedence over the normal contract.
- Sound commercial processes and an existing contracted relationship that is critical to your company;
- People in both customer and supplier becoming more open, collaborative, creative and future focussed; and
- Acknowledging that a well-executed plan with clear goals, objectives, roles and accountabilities is the corner stone of success.
We are now operating in an environment where disruption, changing consumer demand, and rapid changes in technology are overtaking many previously robust companies. We must now realise that it is supply chain versus supply chain to deliver what our customers want exactly when they want them, at the right price and the right quality.
By providing a structured, well-detailed SRM Model, the chances of success are enhanced. With strong leadership and direction from the Executive of both Companies in this model, and the CEO exerting corporate will, the commercial and operational teams will be given the accountability to implement and succeed.