Does Supplier Relationship Management (SRM) ever actually deliver?

The answer is rarely, if ever.

I’m not understating the importance of SRM as a key function within Procurement.

I’ve just rarely seen teams do it well, or put another way, be able to demonstrate the results of a well defined SRM program.

There are 6 reasons why it fails;

1. It’s ill defined.

SRM is not contract lifecycle management (CLM) but even the most experience Procurement pros struggle to differentiate the two;

• SRM focuses on the overall relationship between the organisation and its suppliers. It aims to create and maintain a positive and productive partnership.

• CLM focuses on the management of contracts throughout their lifecycle, from creation to execution, compliance, and renewal or termination.

SRM needs an investment of time and relationship building that still cannot be adequately automated by technology (anyone selling you Procure tech hates this so they’ll sell you CLM, never SRM solutions).

2. The success metrics are hidden.

Strategic partnerships, the best ones, deliver a return on investment to the business that’s rarely measured by standard Procurement metrics.

The best partnerships mean there’s never cause to go to tender or to negotiate savings.

The value is known across the business and efficiencies and innovation driven through effective SRM become business owned, not Procurement driven.

3. Nobody knows where to put SRM

The largest teams will have assigned SRM roles, most Procurement teams just give their Procurement Managers SRM as an objective.

It soon falls by the wayside though because of point 2.

Check out last week’s article on how SRM gets hidden:

4. Effective SRM starts in the boardroom

But without exec team onboard, SRM gets quickly undermined.

Change the mindset, change the game. Those few businesses that view their supply partners as an important extension of the business and see them askey to delivering the needs of customers win here.

5. SRM requires the whole organisation’s buy in.

When have you ever seen teams outside of Procurement receive training of how to work with and effectively manage their suppliers?

Yet these are the people who usually have the most touchpoints with the account manager.

The very best Procurement teams deliver this by educating and empowering their stakeholders, but very few Procurement teams have the requisite levels of self-awareness and maturity to relinquish control in this way.

6. It’s a lot of time and effort

and that’s just not a luxury most Procurement teams have.

The talent shortage in Procurement has only grown since 2020.

Those businesses investing in the function often see value in the short-term gains; cost savings, cashflow benefits, supply chain efficiency.

Significant resources are need on both sides to make SRM work.

When there are competing initiatives and demands, the short-term and urgent will always take priority.

SRM just doesn’t fit in that box, despite it being one of the most powerful things Procurement can deliver.

Do you agree? What have I missed?