Is Supplier Relationship Management (SRM) the Ultimate Solution?

I’m seeing and hearing a lot of buzz about Supplier Relationship Management (SRM) being the ultimate solution for procurement challenges. And while SRM is definitely an answer, it’s rarely the only answer. Like most things in procurement “it depends” is the more accurate response.

It’s crucial to remember that a solid foundation is essential. You need the basics in place – strong governance, effective supplier engagement, and robust contract management – before you can truly leverage the value creation of SRM.

The Hierarchy of Procurement Value

Think of it as a hierarchy:

• Governance: The bedrock – systems, policies, stakeholder engagement, and clear communication.
• Supplier Engagement: Identifying value through effective negotiation and planning.
• Contract Management: Protecting the value you’ve secured.
• Category Management: Maximising value across key spending areas.
• SRM: Driving innovation and identifying new opportunities to save or make money.

Building the Foundation First

Before diving headfirst into SRM, consider the capability and maturity of both your procurement function and broader organisation. What’s the opportunity cost of focusing on SRM right now? More importantly, what are the most pressing procurement challenges that, if solved, would deliver the biggest and most immediate impact for your stakeholders?

Ultimately, our focus should always be on serving the stakeholder. What needs to be done to deliver the value they require? Sometimes, strengthening those foundational layers will yield greater and more immediate returns than jumping straight to SRM.