Charlotte Area CPO's Share Insights on Supplier Relationship Management
I had the opportunity to host a roundtable at Fleming’s Steakhouse in downtown Charlotte for a group of Chief Procurement Officers hosted by Accenture, sharing thoughts on the subject of SRM. The gathering was an opportunity to get to meet peers in the procurement leadership in the Charlotte area, and exchange ideas on themes and issues of interest.
Supplier Relationship Management is an area that is of real interest to everyone in the room, for different reasons. Although organizations are in different stages of maturity as it relates to building a procurement organization that drives customer value, SRM is an important topic regardless of where you are at. Some of the organizations were at the early stages of building a supplier performance measurement system, and had only begun to begin to segment their supply base. Segmentation is critical, as it helps organizations to understand who are the key players, and the capabilities they have to offer. Even more advanced companies are only beginning to truly drive integrated partnerships with their top 20 suppliers worldwide, whereas others are trying to drive internal engagements with physicians to build a capability-based set of decisions for supply base management.
One of the key insights that came out of this discussion was the fact that internal facing relationships are important to drive external supplier relationships. Everyone across the business must be on the “same page” when it comes to understanding how supplier relationships are segmented, and the process for doing so. Second, the need for addressing intellectual property concerns came up as an ongoing barrier, and there must be a way to ensure that supplier’s efforts are incentivized and rewarded if engagement with them is to be successful. Over time, trust can be established that leads to on-going integration efforts, but this takes time and a track record of “doing what you commit to doing.”
Some suppliers will need to establish the right level of capability to meet a buying company’s needs, and may need help understanding what that expectation is. This is particularly true as companies expand into global regions. In such cases, there is an opportunity to bring along your top performing suppliers to drive joint ventures with local emerging market suppliers, to help them get on board and learn operating rules for engagement and performance.
Another topic that came up was the importance of employing performance measurements and scorecards to drive supplier relationships. Several people talked about how “taking control” of supplier quarterly meetings using scorecards as a basis for discussion of performance was critical. This drove productive discussions as well around internal issues that sometimes resulted in suboptimal performance, when suppliers receive different messages from different touch points in the organization.
Finally, the topic shifted to the types of capabilities for supplier relationship managers. Everyone agreed that it was best to pull in someone from the business who was most closely aligned and familiar with the category he or she was managing, whether it be IT, HR, engineering, quality, or other related area. Pulling someone who has direct interface with the supplier should be augmented by a senior executive sponsor assigned to that relationship, to ensure that there is the right pull and the right venue for a dialogue that will result in follow-up and action.
Overall, the session was a great launching point for many productive discussions, and I hope to be able to be part of this meeting again going forward!