Procurement teams can achieve growth by optimizing their supplier relationship management through behavioral changes and digital integration.
An effective supplier relationship management (SRM) program requires procurement teams to rethink the way they interact and build trust with their supply base. Many organizations struggle to give their strategic partners the necessary attention[i], but a supplier-centric procurement approach marries attentive processes with digital innovation to drive productivity and migrate risk.
Productive relationships start with a unified voice outlining clear expectations and requirements to ultimately build trust. Companies increase their chances of creating those long-lasting relationships by focusing on the following key factors:
Actions speak louder than words, which is why companies that create a culture of trust between suppliers and procurement teams generate greater savings. On average, supplier-centric organizations see 26 percent higher savings than their competitors who solely focused on price reductions.[ii]
But companies must work from the inside out, first aligning their internal organization management to create a single agenda. Senior leadership’s support is essential. With the creation of “category councils,” senior executives can meet with procurement and other key teams to discuss crucial suppliers and their relationships with the organization.
Though behavioral changes are a significant part of optimizing the SRM, innovative technologies create opportunities. Real-time supplier data will enable procurement teams to manage performance, and predicative analytics will identify early warning risk factors. Prequalifying suppliers through third parties also can help mitigate current and future risks, and preserve the business’ reputation.
Learn how supplier-centric procurement teams deliver a true partnership model and how one major utility company established an enterprise-wide supplier relationship management program here.