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Supplier Relationship Management
Developing and maximizing relationships to help achieve joint mutual goals
Supplier Relationship Management (SRM)
• Define – What is it?
• Purpose – Why do we need it?
• Goal – What can we achieve through SRM?
• Benefits – Who gains? (“wifm”)
• Actions – What do we do?
• Timing – When do we start?
Business success is based on two things: relationships and patience. Relationships must be built and maintained.
Happy Buyer Happy Supplier
What if?
Supplier Relationship Management (SRM)
• Define – What is it?
NIGP – Principles and PracticesSRM – A set of principles, processes, and tools that assists organizations maximize relationship value with suppliers and minimize risk and manage overhead through the entire supplier relationship life-cycle.1
Key aspects
• Clear commitment between buyer and supplier
• Objective of understanding, agreeing and, when possible, codifying interactions between them.2
• Discipline of strategically planning for and managing all interactions with third party organizations that supply goods and/or services to maximize the value of those interactions
Perspectives
A contract must become a platform to manage inevitable change, not pursue certainty based on the original deal.
Ian Mack. Canadian Dept. of Nat’l Defense
The success of a deal comes from more that just getting the best cost. It’s also measured by quality: is the relationship an asset or a liability? Does the contract enable your organization to achieve its strategic goals?
Sara Cullen. outsourcingtoolset.com
OrganizationNeeds
Procurement• Right Solution• Right Source• Right Price• Needs + Wants • Mitigated Risks• Best Value
Business Unit andEnd-User
Wants + Expectations
Needs?Risks?
Wants?
Mission
SERVICE
(Fast)
QUALITY
(Good)
COST
(Cheap)
"Best value," as predetermined in the solicitation, means the overall combination of quality, price, and various elements of required services that in total are optimal relative to a public body's needs.
According to surveys by Purchasing magazine, the top three priorities for any good or service that any organization procures, in almost every case, were a) Qualityb) Servicec) Price
“The Iron Triangle”
Characteristics• Discipline of strategically planning for and managing
all interactions with third party organizations that supply goods and/or services to maximize the value of those interactions
• In practice, SRM creates reliable, trusted, and more collaborative relationships with key suppliers to incorporate innovation, develop new value, and help reduce or mitigate risks
The greatest victories in war are the ones that are never fought.
Supplier Relationship Management (SRM)
• Goal – What can we achieve through SRM?
State Outcomes1.____________2.____________3.____________4.____________5.____________6.____________7.____________8.____________9.____________10.___________
https://dbm.maryland.gov/Pages/MFR_StrategicPlansFY19.aspx
StateAgency, Business
Unit, End-User
Supplier
Procurement
MISSION DrivenDemand
Supply
Outcomes1.____________2.____________3.____________4.____________5.____________6.____________7.____________8.____________9.____________10.___________
Goals
• State accomplishes mission, goals, objectives more effectively and efficiently
• State and supplier outcomes achieved
• Reliable supply base
• Trusted partners
• Fewer disputes and compliance issues
• Better value for all stakeholders
• More benefits to state and all contract partners
State Procurement Objectives• Aggressive supplier relationship practices structured to maximize
robust and innovative supplier contributions and input to partner in achieving MD strategic Objectives and specific statewide + public body needs
• Develop/manage key strategic category contracts - easy to access/understand/use - with best pricing, quality, and service possible
• Maximize citizen and state supplier participation in any contract opportunity by actively/routinely/directly seeking out qualified small and diverse businesses to provide Maryland government with price-competitive, high-quality goods/services
• As practicable and based on needs, standardize all common materials, equipment and supplies purchased
Benefits - Behaviors and Characteristics
• Added Value
• Commitment
• Communications
• Conflict resolution
• Cooperation
• Escalation
• Fairness and balance
• Innovation
• Integration
• Investment
• Leadership
• Pro-activeness
• Problem Solving
• Resources
• Respect
• Responsiveness
• Risk Identification
• Risk Mitigation
Benefits of Using SRM techniques
Procurement Complaint Forms received by State Procurement between 2015 thru June 2018
• 2015-2016 – down 5%
• 2016-2017 – down 29%
• 2017-2018 (June) – down 54%
Procurement / Supply
Management Role
Procurement / Supply
Management Value
LeadingInfluencing business
Strategy
Safely harnesses and leverages
power and innovation of
suppliers and markets
Value
Management
Increases strategic business and
stimulating sound demand derived from
spend (and supply markets rather than
simply reducing spend magnitude
ExceedingValue
Broker
Customer relationship
management, money
management, and influence
demand and specifications
Demand
Management
Reduces unneeded demand activity,
complexity, immediacy, and variability
AchievingCost
Reducer
Cost modeling; supplier/market
analysis, supplier management,
SRM, supply planning, project
management, risk management
TCO
Reduction…and by reducing total supply costs
NegotiationsPurchase
Cost Reduction…and at the right price, and quality
LaggingFire-fighter
Expeditor - Tactical level, site-
specific sourcing, ordering
Supply
Assurance…right stuff, right place, right time
Incr
easi
ng
valu
e an
d s
up
ply
-sid
e ca
pab
ility
dev
elo
pm
en
t
Tactical
Operational
Strategic
Suppliers can offer you an alternate conceptualization of reality.
Ensure they are part of the team
Supplier Relationship Management (SRM)
• Actions – What do we do?
Robert E. Gleason
Senior Procurement Executive
State of Maryland
45 Calvert St, STE 448
Annapolis, Maryland 21401-1994
410-260-3910 (O)
443-462-7590 (M)
