SRM as a strategy for the immediate future … and longer term

Takeaways from PASA Connect Round Table held on 9th June 2020.

During the early stages of the crisis, most procurement people were either securing vital supply lines, sourcing new requirements or pausing non-operational supply as their business needs dictated. Yet each of these three activities called upon a new level of vendor engagement, really supplier relationship management (SRM) – even to the point where fast relationship-building substituted for procurement process. But how can SRM become a strategy more than a tool as we work our way out of such a critical time?

The recent PASA CONNECT Roundtable with guest expert Kate Skattang from State of FLUX, highlighted the important role that SRM played during the pandemic crisis for so many organsiations, and also how SRM can be a highly relevant to procurement strategy post pandemic. A principle message being that value from a new source can be dramatically heightened by good SRM, or significantly lost due to poor SRM post-contract award. Kate also illustrated how the “six pillars of SRM” help to understand the role of SRM in any supply side business strategy and focussed on collaboration as a key output from these pillars of SRM.

Of course, 2020 will show a different focus on SRM given the Covid-19 pandemic and its implications … and how global supply chain issues are causing problems for local organisations in ANZ. Many have seen early that supply chain VISIBILITY is indivisible from risk. Mapping vital supply chains are now critical, not just for MSA needs, but really for risk reasons. Recent SoF research suggested only 7% of organisations considered pandemic risks in the business continuity plans (BCP). Risk management builds supply resilience. And strong supplier relationships help many secure vital supplies during the pandemic. “Our friends didn’t let us down when it mattered” was a key refrain from procurement managers that had invested in SRM prior to the pandemic – especially on PPE.

The benefits of SRM also include greater supply chain resilience. Things like joint account plans with suppliers can be even more effective than set governance frameworks. Working as a team with suppliers often helps more than process does.  Joint goals drive joint effort, essential if you want to drive the relationship more strategically. Becoming as customer of choice is a strategic goal for many – and can bring access to scarce resources as a reward. Kate cited the hand-sanitiser project at City of Melbourne as a case study.  Technology can also help map your supply chain, and work closer with your tier one and multi-tier suppliers. Strong contract management work, with and without technology support, provides the basis of success for any SRM programme.

SRM programmes often “fail” due to this perceived lack of measurement – both hard and soft benefits: garnering these benefits and articulating them, even through examples, is the challenge that procurement face. Telling the SRM “story” can help – where data dashboards do not. Rolling out a governance framework is not enough. Kate went through how we set up a proactive SRM programme and offered many rewarding tips and best practice advice – outlining the benefits and pitfalls along the way. And eneded with a view on the true value of being valued as a ‘customer of choice’ by your own suppliers.

PASA CONNECT members can view the recording of this online roundtable and access the notes and slides from the event at any time through the PASA CONNECT Member Resource Centre, available through the www.pasaconnect.com website once logged in. Members can also join any of the 20 or so interactive online PASA CONNECT Roundtable discussions each month to share experiences and insights on a wide range of relevant topics.