SRM is a best practice approach to extracting value from your supplier relationships. It takes you from a transactional approach to a more collaborative strategic relationship. Often supplier relationships are reactional, where you only contact them if a problem has surfaced. SRM changes this to a more strategic partnership from the outset in order to open the doors to innovation, evolution, increase digitalisation opportunities and minimise risk.
Supplier relationship management and contract management are two separate elements of the procurement lifecycle.
Supplier relationship management has a far greater emphasis on collaboration, innovation and partnership working.
Contract management is the more traditional execution of the terms and conditions in the contract and management of contract anniversaries.
Mick spent 20+ years working for EDS and HP in the IT and BPO outsourcing industry, solutioning and managing complex Pan-European delivery models. This background has created a real passion for service excellence and delivering solutions that deliver true value.
Traditionally, procurement teams have been focused on getting the contract terms right from the beginning. SRM moves away from this approach and focuses on understanding how the agreement can benefit both parties going forward and what expectations are there, from both sides, for the lifetime of the agreement. This brings benefits for both supplier and buyer creating win-win partnerships through shared opportunities to grow, learn, add value and innovate.
At exceeding, we believe that supplier relationship management is of value for all strategic contracts, but is especially important if the perception is that value isn’t being received or performance is poor. We know organisations strive to achieve SRM but often there isn’t enough internal capacity to monitor the supplier relationship.
The goal for most organisations is to embed SRM with their strategic suppliers, which usually constitutes your top 10 accounts or around 70% of spend.
Successful supplier relationship management is about communication and collaboration. Establishing good processes from the point of appointing a new provider saves valuable time later.
We are often approached by clients at a point where the supplier relationship is almost irreparably damaged. The buyer organisation feels that they have been delivered a poor service or that the supplier is not adhering to the original contract terms. Their first instinct is to find a way to move away from the supplier or to renegotiate terms.
Ideally, we would encourage clients to seek help before reaching this point.
When consulting with clients on their supplier management, we will commonly establish that they have been unable to allocate the necessary resource to manage the relationship, they don’t have any tangible metrics to measure the suppliers’ performance, or that miscommunication has been a large factor in the breakdown of the relationship.
Entrusting your supplier relationship management to expert procurement consultants, like us, when agreements are implemented, or seeking help when issues first arise, can mean a far more collaborative approach to working with your suppliers.
In this blog we explore how collaborating with your suppliers, through good supplier relationship management, and renegotiating contract terms might be a better solution than going out to tender.
By Mick O'Donnell on 27 January 2021
We appointed eXceeding to help us to manage the procurement process to facilitate the running of 28 buildings. We knew that there was a need to consolidate suppliers and reduce the time needed from our own teams to manage them. eXceeding’s team helped us to run a fair and transparent tender process, ensuring that all suppliers were being handled fairly, whilst still ensuring best value for YMCA. With their input we secured cost savings and consistency in the way we manage our supplier contracts which in turn has saved considerable time – thank you eXceeding!
We were looking to save costs across our supplier contracts but were also concerned with our contract terms and SLAs. eXceeding conducted an in-depth review of our current spend and helped us to agree new contracts and terms, which we were able to manage more efficiently. They reduced our costs by over £700k as well as reducing the number of suppliers we have, making our supplier management significantly more efficient. I would highly recommend eXceeding and wouldn’t hesitate to engage them again in any future projects.
Working with the eXceeding team created a close and trusted partnership, with them regularly taking an active part in the CCS Board meetings throughout the contract review process. The consultants helped us understand and navigate the complex BPO contract that had evolved over many years. Once the specification was understood and documented eXceeding did a comprehensive market review and then presented the options and made recommendations. eXceeding then assisted to deliver and execute the agreed approach.
We can help you by either establishing SRM within your organisation or on specific problem contracts.
Our extensive team of procurement professionals have worked in both supplier and client procurement teams. This means we can offer real-world impartial, expert advice to support our clients.
Clarity
Make sense of your supplier relationships
and demystify jargon.
Structure
Create SRM frameworks for long-term
support and performance management.
Strategy
Identify your most strategic suppliers and
define your interaction models.
Performance
Benchmark supplier performance to ensure
value for money from your contracts.
Collaboration
Foster supplier development and integration
throughout the lifetime of the relationship.
Mediation
Improve supplier performance if
relationships have broken down.
eXceeding’s consultants understand complex performance metrics and can ensure that you are benefiting from any innovation, value engineering, scale or new product options as part of your ongoing relationships.
We recognise that every organisation has its own unique requirements. By using our supplier relationship management service, you can be assured you will get independent advice that is tailored to your organisation’s strategic goals.
We review supplier contracts every day, so we understand how to get the best out of your suppliers. As well as establishing a good working relationship, extracting added value and benefiting from cost savings, this approach frees up internal resources to focus on more business-critical tasks.
Our four-stage approach means that we don’t just analyse and define your challenge, but we also develop a pragmatic route map to the solution and manage the transition from business as usual to your desired future state. This means you gain maximum value from your investment and create robust practises and relationships that will stand the test of time.
Our supplier relationship management experts have experience in establishing collaborative relationships and negotiating with a huge variety of suppliers. They’d love to speak to you if you need help and advice.
Why not book a free appointment to discuss your requirements in more detail with one of our experts.
Supplier relationship management is essential for extracting expected value from your supplier relationships. Our expert guidance takes you from a transactional approach to a more collaborative partnership from the outset.
Our outsourcing advice and consultancy solution will support your organisation in creating auditable strategic and tactical objectives which are aligned to your overarching objectives.
Contract renegotiation shouldn’t just be focused on at the point of renewal or change. We can help you take a more collaborative approach to your contract discussions and enhance your organisation’s performance as a result.
