Companies who employ the services of vendors specialized in providing a specific product or service must adequately track these transactions, and this task can become quite complex. Some companies even have multiple vendors they rely on for the smooth operation of their business, making management even more difficult. The acquisition of a supplier relationship management software program can both save the company valuable time and also ensure tracking is up to date and accurate.Companies choosing not to use such a software program instead track their vendors on spreadsheets, and this information can be transferred to a separate computer file for backup. The problem is, however, that nobody is perfect, and errors are inevitable by employing this type of process. Business owners have a valuable tool in software programs that allows them to quickly access specific data or information on demand. Management software programs provide a unique, centralized location where every vendor used by the company is individually tracked using technology that reduces the error that other methods are prone to.Quality control has never been easier since supplier relationship management software has become available. Information obtained from supplier quality ratings such as audits and supplier deviations are automatically assembled and analyzed to give the business owner a better idea of the level of service any individual supplier is providing.These innovative management software systems are adaptable. With a couple of simple clicks, the business owner can quickly link approved goods or services to specific suppliers, and new suppliers can be added to the system just as quickly and easily.Companies with multiple locations can take advantage of web enabled software programs. This type of software allows the user to access information at any time anywhere in the world. Businesses can quickly communicate supplier updates and information to every branch location simultaneously via the Internet. This method can also save hours in efforts made to duplicate and send the information manually.Software programs designed to manage supplier relationships have innovated the way businesses run. By providing a centralized location for all information to be stored and shared, pertinent details can be quickly and easily communicated, even at the furthest distances, providing a broad overview of all suppliers being utilized by a company. It is well worth the initial investment necessary to procure this technology as the lifetime of benefits it provides will, in the long run, save thousands in the time and resources required to manage supplier relationships manually.

Extracting value through capable management of an enterprise’s relationships with its vendors and suppliers of raw materials, goods, and services is the objective of supplier relationship management (SRM). The discipline of streamlining and making more effective the processes that stand between an organization and its suppliers is a further goal of it, and as in customer relationship management (CRM), it involves the use of specific technologies to organize, and make more efficient the business processes that achieve these desired results.Effective SRM solutions necessitate the creation of closer and more collaborative relationships with the organizations suppliers as a means to isolate and capitalize on otherwise hidden opportunities to control risk and squeeze new value out of existing processes. Sometimes this involves asking a supplier to install software within the confines of its walls to serve as a window into which the client can see some how the supplier runs some parts of its enterprise. With this kind of technology, the organization can rank and rate suppliers against other competing suppliers and gain valuable data and insights into performance differences between them so it can be analyzed. At this point Supplier Relationship Management begins to overlap with Supply Chain Management (SCM).Globalization of trade is a leading driver of resource management strategies resulting in an increase in demand for compliance and relationship management tools that can help a company squeeze the inefficiencies out of the supply chain. At the heart of it, is movement toward economic Darwinism where companies enthusiastically agree to do things that were previously unthinkable.One example of this is a large retail chain, which carries two different brands of soda supplied by two competing soda companies. With supply chain studies, our large multi-outlet retailer has discovered that both of these soda companies where arriving weekly with half empty delivery trucks. By convincing these two soda suppliers to agree to consolidate their loads onto just one truck, the retailer saves both of them save money on fuel and driver salaries. The money saved from this process would then be available to go toward price concessions that benefit the organization, which organized and managed this project from the beginning.Having an efficient and transparent supply network can make the difference between success and failure in business. The enabling of collaboration between customers, suppliers, and even competitors permits the development and implementation of joint activities, and it is through the management and analysis of these activities that we reap the benefits of a more efficient supply chain.

There are well published examples on using Supplier Relationship Management (SRM), or Supplier Performance Management (SPM), process to enhance the strategic relationship between the buyers and suppliers. Specifically, SRM refers to the following rules of engagement:
Define goals and performance targets for the supplier, and track them: borrowing from the common performance measurement index for employee, the targets must be S.M.A.R.T., namely: Specific, Measurable, Attainable, Realistic, and Timely. Some of the common measurement techniques for supplier performance are: MOQ, lead time, on time delivery percentage, cost reduction, quality / defect percentage…etc. Some of the lesser used techniques are: environmental improvement, production capacity enhancement, technical capability, reaction time for problem resolution…etc. Though the measurement may be different and must be industry specific, the goal is to provide a good basis to measure supplier against its peers.
Recognize top performers and top offenders: the best and the worst suppliers could be selected based on the performance targets that were set. Company could enhance the business relationship with the top performers with higher business volume, thus achieving a mutual gain situation. On another hand, immediate improvement action plan can be put in place for top offenders to minimize the impact to the company’s supply chain. Further actions can be taken to eliminate the repeated offenders.
Integrate the supply chain for more efficient transaction: SRM integrates the supplier into the company supply chain. The supplier will gain insights to forecast, sales projection, inventory level…etc. This allows the supplier to prepare and stock material ahead of time, instead of waiting for the purchase orders from the customer. This not only shorten the lead time to gain an edge in the ever-more competitive business landscape, but also streamline the overall inventory level, thus reduce cost.
All points above are well developed and documented for a successful supplier relationship. However, SRM doesn’t just stop there. Here are a couple lesser used concepts to reap further benefits from a well managed supplier relationship:
Train the customer: supplier relationship is not a one way street. Instead, the time a company spent on supplier development is as essential as the time the supplier spent on “customer development.” For example, an electronic gadget design company could invite its preferred printed circuit board manufacturer to conduct training courses on PCB design. The customer may be best in designing electronic gadget; however, the engineers can always benefit from someone dealing with PCB on a daily basis. The suppliers also treasure these training opportunities since they are given the chance to present in front of a focus group of design engineers, who are now more inclined to design according to the supplier’s specification. These are great business development opportunities that no suppliers will turn down.
Involve supplier in the early stage of product development: one of the many struggles for procurement professionals is company in general does not involve procurement in the early stage of product development. Instead, procurement function is deemed as an overhead process similar to accounting and finance. When the product is finally launched, the procurement department is suddenly held responsible to wring out every penny possible of the design. Instead of using higher impact cost reduction concepts such as DFA, DFM, material selection…etc, procurement officers are only left to conduct hard negotiation sessions, which is never a pleasant experience for suppliers. By involving the preferred suppliers during the product development stage, the company can ensure the best design is already a shoe-in feature, and manufacturing transition could become irrelevant, since the suppliers are already familiar with the design.
A well managed supplier relationship is essential to remain competitive in the current business landscape. It also allows the company to improve its bottom line, and direct its capital to more productive means.