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Division of Purchases and Supply

WHAT IS SUPPLIER RELATIONSHIP MANAGEMENT?

The National Institute of Governmental Purchasing (NIGP) recognizes Supplier Relationship Management (SRM) as a set of principles, processes and tools that assist organizations in the management of supplier relationships to maximize value and minimize risk through the entire supplier relationship life cycle.

Two Primary Objectives of SRM

  1. Clear commitment between the supplier and the buyer
  2. Organized process of understanding, agreement and interactions

Supplier Relationship Principles

  • Communication
  • Engagement
  • Innovation
  • Collaboration
  • Due Diligence
  • Commitment


Communication, Engagement — Increased value from supplier: best service, higher quality, newest innovationand research; customer-of-choice

Collaboration — Paradigm shift from “us versus them” to “we,” leads to participation and success for all

Innovation
— Lead the way in change and innovation

Due Diligence
—Time value and cost to organization: lowers risk of contract/PO termination and re-solicitation efforts; provides opportunity for conflict reduction/elimination

Influence — Efficiency through Source-to-Pay process: use established contracts/catalogs to ensure price accuracy and negotiated volume discounts; check accuracy of supplier information in eVA to facilitate
timely payment



Collaboration, Influence, Transparency

Engage suppliers to review and verify:

  • Expectations and contract deliverables
  • Understanding of contract content/language
  • Issue-escalation process
  • Means of measuring success

Cost can never be the sole measurement of success.

 
Goals of a Sucessful SRM Program

  • Reduce the number of procurement complaints
  • Create more flexible contracts and less need to revise or renegotiate
  • Measure supplier performance and encourage innovation
  • Identify strategic contracts to save money
  • mprove decision-making tools and processes for awarding solicitations
  • Identify and simplify the escalation process