SRM for large suppliers

SRM is an important element that drives a lot of the right strategic alignment of different initiatives. The key piece is establishing whether this is a tactical activity occurring through supplier managers at the business unit level, or though a category enterprise team. For instance, one of the questions that came up was for a large financial services company. Establishing governance structures and categories that are aligned by supplier vs. Line of Business will also require further thought. For example, some of the largest suppliers (e.g. HP, IBM, and others) may span multiple categories. In such cases, a single supplier manager might coordinate with multiple category leads to ensure alignment and roll-up of supplier scorecards for supplier account management, leveraging the enterprise relationship. Other areas of spend that may cover multiple categories, and will have to be clustered in a supplier-facing or customer-facing role based on different rationale. Not all suppliers will fit neatly into a category and may be treated differently. No matter how structured, the general principle as outlined by Pierre Mitchell in a recent Hackett Group report to follow is that the business-facing role and the supplier-facing role for a category of spend are clearly defined and staffed appropriately. Category management must incorporate supplier relationship management, although SRM resources will likely be distributed across the procurement and business groups, and will have strong lines into category managers. Critical success factors include require strong leadership support, supportive IT resources, effective knowledge management , a renewed commitment to LOB customers, enhanced capability development in the associate base, and consistent lines of communication with the supply base.