Hard coding the value in relationship management. We look at how companies are transitioning from “soft” SRM to substantive, quantifiable—technology-enabled SRM, driving an entirely new level of value extraction.

Supplier Relationship Management (SRM) is the systematic approach to:

• Managing and evaluating a vendor’s performance
• Determining the supplier’s contribution to the organisation’s overall success
• Developing strategies to ensure progression

SRM came into being in 1983 when McKinsey consultant Peter Kraljic suggested corporate buyers needed to grow more proactive in supply management. That original article can be found right here. Decades later, technology is finally enabling the kind of proactivity Kralijic envisioned. Historically, due to a lack of measurable data, SRM was, by and large, a subjective process reliant on feeling and interpretation. Further hindered by the relentless pursuit of lower cost, SRM was normally deferred in favour of other more addressable spend management exercises, often becoming almost adversarial in nature.

 

Since then, a more balanced, service-centred approach to performance with a longer lens on “success” has emerged. This, in turn, has created a shift to a more holistic procurement practice exploring levels of strategic value. And as companies’ dependencies have ratcheted up on relationship-driven gains as a source of material value, so modern collaborative SRM has served to create a real competitive advantage, promoting quality, efficiency, innovation, and growth. So much so that a company’s market foothold and long-term viability have become synonymous with how well they manage the relationships with their most critical suppliers.

 

The golden age of Supplier Relationship Management.

Now, in what is fast becoming the golden age of modern SRM technology, those at the forefront are leveraging the potential in what their relationships have to offer to solve some of today’s key challenges facing the customer-supplier ecosystem.

Thanks to innovators like Suppeco, who are helping more and more companies to capture and hardcode the value in their key relationships, the previously unmanageable space has become more objective, where the benefits and merits of any given relationship are more substantive, measurable, and efficacious.

 

Dynamic performance improvement: From reactive to proactive – and hard coded- performance management. How real-time data and visibility leads to maximum value extraction.

The global pandemic has underscored what the birth of digital technology should have long since made apparent—it’s time to vacate the legacy approach to SRM. Traditional governance cycles are out of step with the newest tech and fail to live up to the pressures of current-day operations and unrelenting shareholder expectations.

For decades, procurement and supply chain professionals have mainly managed their data through spreadsheets and slides, success constrained and even dictated by the limitations of the tools at their disposal. As a result, SLA performance was measured and reported in hindsight, with little information available to inform decisive, corrective actions.

Today’s volatile supply chains, however, require proactive, dynamic governance; with fast, often real-time responses. Neglecting to measure performance or failing to identify gaps and areas for improvement typically leads to eroding profits, missed opportunities, and poor customer satisfaction—penalties companies can no longer afford to absorb.

 

Today, equipped with a relationship-first, insights-driven digital platform, Suppeco partners can:

• Explore, plan, align, execute, and manage tactical and strategic objectives
• Oversee all operational activities
• Gain complete visibility of all ongoing as well as any remedial actions or service improvement activity taken by all parties
• Track and audit against regulatory compliance standards
• Measure achieved levels of service with performance metrics, levers and KPIs
• Implement and execute contingency plans, mitigation tactics, and course corrections
• Benefit from automated workflows to ease resource constraints and stay ahead of events as they occur

Without quantifiable benchmarks, improvements and performance are left to interpretation. This is the historically “soft” side of SRM that could often make for political warfare, frustrating stakeholders and board members looking for the black and white to mitigate the risks of seeing red.

Instead, by digitally measuring live performance data, and deploying levers that monitor and trigger progressive improvement plans, procurement and operational leaders can now minimise the more traditionally drawn-out costs of time-to-action and time-on-task, thus hugely accelerating their rates of return.

 

How a digital relationship control centre helps to measure action and extract value.

According to Mckinsey’s “Shifting the dial in procurement”, innovative digital solutions in procurement can unlock as much as an incremental 3 to 10 per cent in annual cost savings.

In their example, a geographically dispersed resources company developed a mobile app to digitise the monitoring of suppliers’ KPIs, resulting in reducing value leakage by up to 5 per cent. The app allowed field supervisors to provide real-time feedback on supplier performance and enabled improved performance discussions with suppliers on schedule and quality attainment.

This segways neatly into Suppeco’s differentiating purpose – creating structure, planned execution, and management within the relationship layer – the area that lacked any measurability, now both structured, and manageable to support a substantive opportunity to drive alignment of tactical and/or strategic objectives.

Suppeco’s vast range of dynamic relationship infrastructures, empowers cost busting proactivity by leveraging its real-time digital capability – the combination of which being an absolute imperative for improvement in today’s non-stop customer-supplier / supply chain operation.

By providing a market leading collaborative tool, enabling any actor, regardless of geographical location, to contribute and align, provide feedback, information, or validation—even multi-format file or image-based data—Suppeco allows issues to be raised, analysed, and addressed in real-time, spurring alignment, action, and of course critically measured improvement, throughout any ecosystem.

 

Supplier strategy and execution.

Strategy execution is firstly a plan for achieving a set of objectives – then making that happen. But executing strategy is not easy. It means meeting timelines, aligning on plans, goals, and budgets. An effective supplier strategy requires:

• Involving all relevant resources and actors in planning for key initiatives and objectives
• Jointly developing plans to incorporate service improvements and innovations
• Discussing and managing trade-offs and negotiations with critical stakeholders

To execute effectively, supply chain and procurement leaders will broadly engage across the business and or broader ecosystem to ensure ongoing performance, communicate priorities, monitor compliance, measure project direction and cadence, make course corrections, and learn lessons – all whilst determining the ongoing value that the SRM program brings to the organisation.

This means leaders must consistently nurture their relationships through sound governance designed to build trust and mutually beneficial partnerships that fuel innovation, efficiency, and growth—all further promoted through increased visibility and mutual transparency.

Bringing efficiency to innovation with a digital control centre that homes your entire engagement narrative, all documentation and communication remains in one place, letting you see the entirety of the relationship, at the right level of detail, from one end to the other.

 

The Four Pillars, Your foundation for growth.

Just as our personal relationships require structure and boundaries to avoid becoming dysfunctional, our business relationships are no different. As we said at the beginning, technology is finally enabling the kind of proactivity Kralijic once envisioned, now bolstered by Suppeco’s Four Pillars.

 

Suppeco Four Pillars. Ordered simplification based on universal engagement structures.

The Suppeco relationship layer, which is aptly named Four Pillars, follows an overriding and somewhat logical principle that every supplier engagement regardless of what’s being bought or sold, can be split across these four main categories or “pillars” of engagement, captured each by the following lenses:

The Relationship lens: typically focuses on qualities such as commitment, communication, trust, flexibility, strategic alignment, objective setting, governance,  and other relationship-based values.

The Commercial lens: typically focuses on commercial and financial matters such as actual versus budget, reduction in TCO (total cost of ownership), all aspects of invoicing efficiency, PO management, spend management, and procurement.

The Projects lens: emphasises quality and focuses on environmental standards, audit, process quality, security, products and product lines, delivery, skills, staff & resources.

The Service lens: emphasises performance and focuses on different aspects of project and service delivery, efficiency across lifecycle, SLA compliance, performance management, and support.

 

Precision targeted improvement.

Each of the four pillars, contains an unlimited array of subcategories to provide a more granular working breakdown of the key activities and disciplines that sit logically within each pillar. These subcategories (aka Reciprocal Assessments) are omnichannel workplaces packed with collaborative power, each representing a frictionless area where stakeholders – board level to operational, including wider business units can come together across an ecosystem to engage securely in real time, in pursuit of targeted execution.

 

Secure your place in the future.

If you’re ready to chat and find out more about how Suppeco can help you manage your critical relationships and extract maximum value, contact us now to arrange a personalised demo.