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Unfortunately, lately the supplier relationship has been reduced to an acronym, specifically when talking about technology to enable the management of the supplier relationship. The acronyms are numerous - SRM (supplier relationship management), SBM (supply base management), SLM (supplier lifecycle management), SIM (supplier information management) and numerous others. While the acronyms themselves are not important, the business processes, content management and ability to connect and interact with the suppliers about the relationship's past, present and future state are at the heart of the technology's enabling capabilities.
Optimizing Resources. Supplier relationship management technology is a resource optimizer of technology, people and process. Optimizing across and within the data and details provides visibility into the suppliers, such as enterprise supplier information, contract content, supplier performance criteria, supplier financials and risk parameters; risk points; and world news. This data is then coupled with the view of the people resource to understand and make sense of the data and information provided in the past, present and future. Lastly, the technology data, people knowledge and interpretation are combined with the business processes so the necessary changes and correct interpretations can be made.
Develop the Relationship. Resource optimization, when done right, allows the resources to focus in on suppliers that need further development, supplier relationships that need to be terminated and suppliers that are performing well. The business gains the most when focused on developing the right suppliers who can positively impact the business. The value of improving the supplier relationship has an ROI that can be as much as 20X the value derived from a single sourcing event. Value to be delivered is the determining success factor when developing supplier relationships.
Deliver Quantifiable Impact and Value. When efforts are focused on developing the right suppliers, the fear of the unknown dissipates and the relationship is built on trust. This trust allows both the buyer and supplier to improve their top and bottom lines, collaboratively working together towards mutual goals. The buyer and supplier are in alignment on their goals, needs and business requirements to ensure a successful outcome for both that is of substantial quantifiable value. It is no longer a view of what the supplier is missing and “what do we need to do to check the box”, but rather a view of value – what is the value our business and the suppliers business derives from a mutually beneficial relationship? It becomes a question of what impact are we, the buyer and the supplier, bringing to our businesses?
Nurturing and developing supplier relationships can make the relationship a valuable commodity. The key is the value both parties place on the relationship. Supplier management technology provides visibility into the relationship, the business processes enhance the opportunity for success, while the connecting people are the knowledge masters that interact, bring greater value and build trust. The supply base might be complex, but the interactions are the turning point of relationships; the value derived.
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