SRM is Dead Long Live Return On Relationships, here is why we simply must bin the term SRM.
Why, you ask, do I want to do away with the term SRM (supplier relationship management)? For one clear reason it’s misleading and represents a one way relationship. So what would be the solution ROR (Return On Relationships)?
We must first start by looking at what the official meaning of SRM is:
Supplier relationship management (SRM) is the discipline of strategically planning for, and managing, all interactions with third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions. In practice, SRM entails creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value and reduce risk.
So SRM is about aligning and collaborating with your key suppliers to unlock previously missed value. However the term supplier management refers to the idea of a buying organization managing the supplier rather than working in collaboration.
SRM is one way facing and it refers to an action by buyers onto suppliers, in a true collaboration this is not the case. Businesses work together aligning themselves and their actions together to drive mutual benefits.
So plainly SRM cannot mean collaboration, nor can it be seen as the frontier to drive integrated supply chains.
SRM has been dragged through the mud over the years, and thus is perceived by many suppliers as another devious plan to attack them on cost, which in truth many businesses have used it for. Suppliers see it as a Trojan horse to attack them from the inside, these connotations mean that before collaboration has even begun everybody is on the back foot.
Entering into the realms of collaboration is a whole new dawn for procurement and the way we must work, so is it not right to start a fresh? Is it not time for a term that can be used mutually by both the buyer and the supplier?
Are you ready for this or are you yet another buyer taking the role of innovative pretender?
So what is the solution, well it’s as simple as this, lets bury SRM in amongst all those failed buyer supplier projects, in the graveyard for innovation. Now open your eyes to a new dawn where innovation, collaboration, and driving a real return on relationships is feasible. Because supplier collaboration is critical to business success.
We introduce to you ROR – Return On Relationships
In the words of Nina Simone:
It’s a new dawn
It’s a new day
It’s a new life
And I’m feeling good
In short Return On Relationships is both a methodology and a philosophy designed to drive competitive advantage, innovation and real returns from collaborative buyer and supplier relationships.
Businesses are increasingly turning to external functional specialists to address the productivity imperative. More than two-thirds of productivity growth comes from product and process innovation, and companies must source even core functional activities from specialists to foster this innovation. This has resulted in a growing network of partners to manage along an end to end value chain.
Return On Relationships acts as a springboard to make change and drive value beyond where it currently is. It allows relationship owners to map and measure the complete value that comes from commercial relationships along the entire value chain.