Supplier relationship management
There’s a new buzz phrase in the air: Supplier Relationship Management (SRM). Corporate executives know it’s necessary, but there’s only one problem. Nobody yet knows how to do it. Or they think it’s all about bashing your vendors over the head until they
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Contents About the Authors ��������������������������������������������������������������������������������� ix Preface��������������������������������������������������������������������������������������������������� xiii Chapter 1: Procurement Success vs. SRM Failure����������������������������1 Chapter 2:
Supplier Relationship Management ��������������������������������7
Chapter 3: To SRM and Beyond!�������������������������������������������������������� 13 Chapter 4: Introducing Supplier Interaction Models���������������������� 27 Chapter 5: The “Ordinaries” ������������������������������������������������������������ 45 Chapter 6:
“Problem Children”�������������������������������������������������������� 63
Chapter 7: The “Critical Cluster” ���������������������������������������������������� 89 Chapter 8: Putting Supplier Interaction Models to Work������������ 113 Chapter 9: The Role of IT in TrueSRM������������������������������������������ 143 Chapter 10: The “Difference” You Get from TrueSRM ���������������� 157 Index������������������������������������������������������������������������������������������������������ 171
CHAPTER
1 Procurement Success vs. SRM Failure The Rise of Procurement Let us be clear about one thing right from the start. This is not another book bashing procurement and calling out its allegedly many and obvious shortcomings. Over the past 20 years, procurement has made lots of great strides. A. T. Kearney’s periodic study Assessment of Excellence in Procurement (AEP) speaks a clear language. Across industries and at a global level, procurement functions are in a pretty good shape. Today, most companies do have a chief procurement officer (CPO) who has earned a seat at the table with his or her peers from innovation, production, marketing, sales, and finance. Given the high degree of focus on core competencies that can be observed consistently across industries, outsourcing of significant elements of the value chain has become the norm rather than the exception. This trend, more than anything, has fuelled what could be labeled as “the rise of the CPO.” Strategic decisions about which product market segments to address and where and how to make products are driven rather than just supported by today’s CPOs. And this modern CPO is more likely to overstress the term customer value than the term cost savings.
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Chapter 1 | Procurement Success vs. SRM Failure At the same time, functional silos have crumbled to ruins. Walk the corridors of any leading company and you are likely to see cross-functional teams working on key initiatives. Today’s procurement executives are as eloquent in engineering and marketing language as their counterparts in the other functions are fluent in the language of sourcing strategies. The age-old tactic of suppliers playing functional managers against procurement people has largely lost its value and might even backfire on the suppliers. Also, pounding the table has ceased to be the preferred sourcing strategy. Today’s procurement
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