Empower your Procurement process with customer service and relationship management for Procurement

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how would you describe your relationship with your vendors are they strong a bit shaky or just mediocre in times of uncertainty your supplier relationships can make or break you it's not just about Landing the best deals but about building strategic Partnerships Supply relationship management or SRM is a crucial element of Supply Chain management it involves recognizing your most important suppliers and implementing strategies for maintaining those connections as your business grows and your supply chain becomes more and more complex it becomes increasingly important to assess how each vendor impacts your performance in this video we give you three steps to manage your suppliers and add maximum value to all stakeholders if you've got numerous supplies in your ecosystem the task of building a strong relationship with each of them can seem overwhelming but while every vendor's contribution needs to be acknowledged you must categorize them ing to priority this brings us to step number one supplier segmentation simply put supplier segmentation is the process of grouping your suppliers ing to their level of importance first you need to identify your key suppliers these are the companies without which your business cannot operate successfully because they have the greatest impact they involve the highest risk and thus require the most intervention here's a quick example suppose you are the finance manager of several Michelin star stakehouses your relationship with your butcher is far more critical than your relationship with your paper towel supplier because the success of your franchise largely depends on the quality of your beef to ensure that you always serve the juiciest steaks your relationship with the butcher requires special care and communication in the past suppliers with segmented primarily ing to how much a business would spend with them but this model has since evolved nowadays The kraljic Matrix is used to plot suppliers into one of four quadrants depending on how much they impact the profits and the risk they involve let's break it down on the top right is the Strategic items these are your high-risk suppliers that deliver critical products and services without them your supply chain could face severe disruption which means they require the most intervention next are the leverage items on the top left this quadrant represents suppliers who are equally critical to your organization but present a lower risk perhaps the products or services are easily obtainable elsewhere or the supplier is capable of delivering to a high standard regardless of your input on the bottom right are the bottleneck items this quadrant consists largely of tailed in suppliers there are high risks but deliver little to no value for your organization bear in mind though that several of these suppliers will be single source so you're still reliant on them last we've got the non-critical items on the bottom left these suppliers provide your organization with low value low impact items with negligible risk suppliers in this quadrant require the least effort to manage now that you've segmented your suppliers you need to develop a supplier strategy this involves forming a plan of how you're going to work with each of them but remember all suppliers are Partners you need them just as much as they need you your strategy should reflect this by benefiting both parties here Finance managers have the chance to be highly Innovative it's about improving the whole company value chain and considering where and how key stakeholders can add value to each other creating an effective supplier strategy involves five actions the first is to demonstrate that you're a good customer it might seem obvious but it's easy for a partnership to be ruined when either party fails to meet the needs of the bargain you can be a good customer by paying your bills on time giving your vendors enough lead time and communicating openly and clearly if you cannot pay your bill in time in that case be transparent with your supplier and let them know when they can expect payment their operations depend largely on timely payments just like yours A supplier strategy also requires that you create a risk management plan with so many variables risks are inevitable when it comes to sourcing and working with vendors a rigorous Supply selection process can help you minimize potential risks before signing with a new supplier be sure to contact their references look at examples of their previous work determine their financial stability and evaluate their ability to handle the order capacity by doing this you will already eliminate some of the risk nevertheless you will still be vulnerable to some degree therefore you need to have a risk management plan in place in case something goes wrong for example you might have another vendor on standby should there be an issue with your primary vendor this will stop potential problems from Rippling through your entire supply chain if a problem occurs you also need an action plan for resolving it with the supplier even if both parties are committed to the relationship hiccups will still happen from time to time in mapping out this path try to answer questions such as which party is responsible if a problem cannot be solved at the most basic level you are the responsible people on both sides what roles will these people fulfill the next action you want to take is to centralize your supplier's point of contact with your organization rather than engaging with suppliers through various departments like procurement Logistics and quality assurance identify a single point of contact this builds trust with the supplier and makes for a far more efficient system working with different units can frustrate vendors if there's a lack of consensus and coordination to allow different departments to have input organize annual meetings where department managers can discuss issues with supplier executives this joint approach will provide more value all around the last consideration is developing a mutual scoring system with the help of your vendors formulate metrics to measure and manage Performance Based on the value delivered to both organizations implementing a two-way balance scorecard process allows both buyer and supplier to measure each other and forms the foundation of data-driven conversations with all the scorecards on the table buyers and suppliers can have constructive discussions to reach more effective profitable Solutions the final step in managing your supply relationships is follow through you can have the most brilliant plans on paper but if they're not implemented they're futile if possible assign a relationship manager to each of your vendors these team members will then be responsible for all SRM activities which will improve accountability and prevent any one person from taking on too much assigning a relationship manager to each of your critical suppliers is especially important they need to maintain a Cooperative relationship with these vendors and ensure smooth communication between all stakeholders managers will also help you align your evolving plans to the vendor's needs thus benefiting everyone to recap the three steps to managing your suppliers are one segment your suppliers to developer supplier strategy and three follow through on the plan in the final module we talk about building your dream Finance team if you're going to successfully control company spending you're going to need all the help you can get and we're going to show you how