SIG University Certified Supplier Management Professional (CSMP) program graduate Indre Ciuberke breaks down the importance of the Supplier Relationship Management (SRM) Framework and the four quadrants of SRM communication that adjust the ways of working with suppliers.
When you think about the Supplier Relationship Management (SRM) Framework, it ‘s not just walking and talking with your Organization partners and having a relationship with them. From my perspective, SRM is based on relationships, however, stressing the communication and information sharing process in the particular relationship. Usually, SRM has corporate attributes such as ensuring the governance, agenda tracking and managing risks associated with the services or products that the supplier provides to the organization.
Every team is focused on bringing value to the organization. SRM can contribute to this is to push the streamlined service delivery by becoming a core internal team in the organization’s structure for outsourced service management.
Supplier Relationship Management Team Framework
I have tried to describe the basic SRM as an internal core team framework in the picture above. The idea is based on communication and information flows:
- SRM cannot function properly without knowing the organization ‘s strategy and direction, which should come from the Senior Leadership quadrant. This would cover the long-term plans and the company-wide vision to which SRM can manage and tweak the Supplier relationships to meet the goals.
- Another important aspect is to gather Business Management (or the operational teams) feedback. This might not be precisely strategy-focused; however, business feedback is crucial to ensure the SRM puts focus and effort into the correct area when managing Supplier Relationships. For example, this could be supported with continuous service improvement plans, driving innovation or diversity projects.
- Sourcing Category Management can very much influence SRM as well. Sourcing Category managers have frequent discussions with Business Partners and other Internal Stakeholders to drive the organization’s sourcing strategy to deliver financial and non-financial value. By keeping the communication channel open, SRM can gather vital information for managing supplier relationships. This could include new innovations available in the market or a decision to expand services to different locations. But also give valuable information back to Sourcing, who can then use it in their proposals for Business.
- And last but not least, there must be a requirement feed coming from the Internal Risk and Compliance teams. In this bucket, multiple small groups or individuals provide guidance and requirements from the organization’s perspective for specific controls (e.g., cyber risk, Business Continuity, Data Privacy, etc.), which must be aligned with supplier deliverables and supplier risk management. For example, suppose the organization is changing or implementing new ways of working in certain areas. In that case, it might influence changes in the requirements that can be easily shared with particular suppliers through SRM.
Utilizing the Supplier Relationship Management Framework
The points described above add up to a simple communication framework that becomes inevitable in today ‘s constantly changing environments. Therefore, SRM needs to continually focus on tailoring its processes and procedures so none of the company ‘s requirements are missed or misinterpreted.
It is vital that in case there is a lack of information coming from either of the buckets, SRM takes the initiative and sets an internal governance structure to gather and share feedback. Open roundtable discussions conducted per sourcing category might be a great win-win solution when SRM acts as a moderator for the discussion between the four quadrants’ representatives. These discussions can also benefit SRM by receiving feedback on areas that might not be bringing value or requests to shift the focus to specific areas to support mitigating any risks.
The COVID-19 pandemic has highlighted the importance of managing the organization’s suppliers and having governance and communication channels built to ensure quick and easy exchange of information. When it comes to risk mitigation in the critical situation, having those four quadrants and SRM involved could help reach the decisions more quickly and adjust ways of working with the suppliers a lot easier.
The Certified Supplier Management Professional program is a five-week course delivered through SIG University ‘s unique education platform. Visit our website to learn more about the discipline of governance and enroll for the upcoming semester.