Numbers and spreadsheets are not enough: Six crucial signs you need an SRM agenda now!
Currently you may get along well enough using tools such as Excel, online surveys, contract management tools and data warehousing to manage the procurement function. As businesses and procurement evolve and become more complex, so does your relationships with your suppliers. With the limited resources of the procurement function, you will realize that you need more efficient, smart and proactive ways of monitoring and measuring your suppliers.
Procurement teams ready for this shift will experience some indicative signs. Being able to read these signs at an early stage will save you time and costs, and help your procurement team avoid pitfalls that you will endure if you do not have a proper SRM agenda. Here are the six signs that you are ready to trade in those old Excel spreadsheets and start managing your supplier relationships in a more efficient way:
- Your team is overloaded
You often experience very limited resources in the procurement department and you have hundreds of suppliers to keep track of. Getting tired of the frustrations and stress? Well, then it is time for SRM. Collect all your data on one platform and create a 360 degree overview of your suppliers, regardless of the total number of suppliers and the number of staff members in your procurement team.
- Narrow focus on supplier performance
You need an SRM agenda if you only measure your suppliers on their ability to deliver the correct quantity on time and at the right price. If the price matches the quality, everything seems to be fine, or does it? Allowing stakeholders who interact with your suppliers to give constructive feedback is a crucial way of measuring your suppliers’ performance above and beyond what the numbers and data represent. What about supplier service, after sales support, responsiveness etc.? Why not have total overviews with both hard data and soft constructive feedback?
- Your suppliers are hurting your business
If your suppliers do not live up to their expected delivery times, you may possibly experience delays in your production. If the quality of your raw materials is not good enough, your products will most likely suffer the same fate. If your products do not meet the quality standards expected by customers, it will hurt your business. Identifying these gaps at an early stage and making corrective actions plans in close collaboration with suppliers will prevent your supplier base from hurting your overall business.
- You are wasting time on ‘connecting the supplier dots’
You need an SRM solution if you use many disconnected systems such as Excel, paper, emails and phone calls, and when you manually try to manage your suppliers’ contracts, claims and supplier risks.
- You do not know the nature of the relationship across the organization
When it is time to renegotiate supplier contracts, you want to know how successful your cooperation is, but no one really knows. So what should you do? You probably focus only on costs and assume everything else in the relationship is fine. If so, it is time for an SRM agenda. Imagine having a history log of supplier performance easy to access and on one platform with both hard and soft facts, allowing you to be better prepared for the upcoming review of your suppliers.
- You only have a price focus
When you focus only on price, it is time for a broader SRM agenda because the total costs of owning a suppliers is significantly higher than the price. Research actually shows that others costs can be significantly higher than the price.