Supplier Relationship Management (SRM) Better For Both Sides
Even with the seismic changes in today’s business climate, some supply chain habits die hard. Many businesses still follow a pretty dated model in dealing with suppliers. That dated supply chain model calls for intense competitive bidding, a relatively short-term agreement built primarily on the lowest price, and the relentless stress placed upon a supplier to jump through hoops and perform flawlessly – only to lose the next opportunity when a different supplier undercuts the price by the smallest margin.
Technically speaking, that supply chain management system may in fact result in the lowest raw “cost” on the item supplied. But companies with a broader and more holistic approach to business growth, recognize that this rather simplistic understanding ignores many other factors equally or more important to long-term success.
I came across a very convincing post addressing this issue over at Cerasis, a leader in third-party logistics. The post – “Why Companies Need a Supplier Relationship Management Strategy” by Irina Rosca- details many clear benefits of looking at that supplier relationship very differently. It’s worth a read, but I’d like to give you a quick recap of the article here. Cerasis deals primarily with freight and transportation management. But I was struck by how closely the advantages of Supplier Relationship Management (SRM) align with what Superior Business Solutions offers our clients through the management of their print and promotional product supply chains.
Preferred Customer Status Has Advantages
Rosca describes one company’s new SRM strategy that may have helped boost its stock price 10%. The example demonstrates how a closer working relationship with suppliers helps ensure that a company gets the best sales terms, more flexible arrangements that better accommodate fluctuating manufacturing capacity, and first access to innovations and process improvements. At Superior Business Solutions, every customer enjoys the benefits of our unique expertise and resources. But it is certainly true that when we have a long-term customer relationship, we are in an even better position to quickly identify the right resources for their needs.
Benefits of A Connected Supply Chain
In a traditional supply chain arrangement, suppliers may handle different steps in the chain with little or no communication among them. This can cause concerns to go unaddressed and early flaws or problems to snowball. At Superior Business Solutions, we have access to a multitude of quality-verified vendors, but we provide the structure and oversight that makes the process transparent and very well coordinated.
Partnerships Based on Trust Matter to Business
The article points out that “transactional” relationships can be very shallow, and do not engender the same kind of trust, reliability and flexibility that long-term, mutually beneficial relationships tend to create. Our company is very proud of the long-term relationships we have enjoyed with many, many customers. Even many of those who first discovered us as part of a “transactional” bidding situation now regard us as a trusted partner meeting all their print and promotional product needs as they arise.
A Better Financial Approach
For many companies, paying suppliers is an “expense” to be avoided for as long as possible, creating mistrust and undermining future collaborations. Through good supplier relationship management, costs are minimized as longevity and continuity are prized by both parties, and mutual trust brings exceptional supplier performance. This brings value to the enterprise well beyond whatever small cost savings “lowest bidder” pricing and delayed supplier payments create.
Expectations and Performance Clearly Documented
A comprehensive SRM plan helps companies to evaluate suppliers based on their logged, measurable performance. Key Performance Indicators (KPI’s) can help companies prioritize demonstrated attributes like accuracy, meeting deadlines and other important criteria. While this clearly helps the company, it also aids the supplier who can quickly identify strengths, and address areas that need improvement. At Superior Business Solutions, this is essentially what we already do in evaluation our roster of print and promotional product suppliers. Basically, we know who is good at what. That’s why when we get a project, we can quickly determine the best fit based on the most important criteria for that project.
Ensuring Responsible and Sustainable Supply Chains
Finally, the post addresses some issues that are increasingly important in today’s marketplace. As consumers become more concerned (and aware) of who made their products, where they were made, and under what conditions, transparency is critical. Research shows that customers will pay more for products brought to market via a supply chain that embraces social change (treating workers fairly) and environmental sensitivity. SRM helps make everything visible and easy to document, wherever in the globe those suppliers do business.
Measuring Our Standards
Here again, I’m happy to measure Superior Business Solutions against those standards. On the environmental aspect, we can help companies in a very functional way, by providing eco-friendly bags and other items. Our Corporate Kiosk print management system (and on-demand printing) can greatly reduce waste by printing only what is needed, and customizing pieces for targeted use. No more warehousing (and the ultimate disposal) of outdated materials.
In terms of precise planning and systematized management of all supplier interactions, we monitor everything so that we do business efficiently, responsibly and ethically. Our recent ISO Certification is certainly an indication not only of our commitment to those principles, but our adherence to them.
Thanks again to Cerasis for the interesting post. It’s pretty clear that the days of playing “supplier roulette” on a project-by-project basis are over for smart businesses. If you have a thought on supplier relationship management, give me a call. And if you’d like us to demonstrate its value as your supplier of print and promotional products, we’d certainly be happy to take that call too!