28 May 2020
Effective Supplier Management – Its greater than the ‘R’
Written by James Cowley
In the spotlight
Supplier management, the managing of supply relationships and the associated supply chains happens day in day out on a global basis and is not a new phenomenon. The recent pandemic has however pushed procurement and the management of supply chains firmly into the spotlight more than ever before. There have been many great stories of how Procurement teams have stepped up to deliver fantastic outcomes for their business (and our country) for example AGCO as reported in Forbes and Sainsburys in the UK
Personally, and as a ‘died in the wool’ procurement & supply management practitioner, I’m delighted to see the recent good press and hope that it can be a springboard for even more teams to elevate themselves within their organisations and the industry. Such great results however cannot be delivered without the efforts of suppliers and the collaboration of both parties. It’s this teamwork that will pull you through when the pressure is on the most, but this doesn’t always happen overnight or by itself. It requires an investment on many levels and ultimately the right approach to succeed and its this that is the focus of my article today and subsequent follow-ups in the coming weeks.
It’s the techniques that count
Working effectively together is likely to lead to good outcomes, however good collaboration is not always present, and the investment is not always made to foster the relationships that ultimately make a difference to business performance. Organisations deploy different structures and models to manage their supply base, whether that’s an ‘end to end’ approach overseen by the ‘Procurement Team’ or the deployment of a separate ‘Supplier Management’ function. In my view, both approaches have their merits, but key to the success of them is the use of the right techniques and the investment in the right skills. Fundamentally however, if the key aspects for managing your supply base effectively aren’t understood then you will never truly realise the potential of your supply relationships.
Each day at present we hear reference to where the UK sits in respect of the ‘R’ (the measure of how transmissible, or contagious COVID 19 is) as part of the Government update and this strikes parallels for me with how people often refer to the practice of managing suppliers.
I frequently see and hear the acronym SRM (or Supplier Relationship Management to give it its full name) when people discuss how they manage suppliers, but for me the ‘R’ or ‘relationship management is merely one aspect of effective supplier management. I’m passionate about working collaboratively with suppliers and in my 20+ years of being in the industry I’ve always worked hard at fostering good supplier relationships. However, I believe that it takes more than just relationship management to drive exponential value from your supply chain.
Starting today and in a series of follow-up articles I’ll be delving into each of the key areas that I think should be addressed to enable you to move the dial from savings delivery to value creation. And whilst there have been many good articles written already on the subject (such as Claritum), I want to offer my take on what ‘good’ looks like.
The 4 key pillars
In my view, effective supplier management is based on 4 key pillars and when combined this will provide a fantastic platform for delivering tangible value to your business. Each of the ‘disciplines’ absolutely have value in their own right, but in isolation will not cover all of the bases you need to. Below I have outlined the 4 critical components that, in my view, make up ‘Supplier Management’ and I’ll focus on each in more depth over the coming weeks.
Some will argue that there should be a 5th pillar – ‘financial management’, but my view is that this should be practiced throughout all of the disciplines below, in one form or another. As such the ‘golden four’ for me are:
Each of these needs to be clearly understood including what techniques to use and when and where to use them. Organisations may understandably deploy an approach that is right for them and have slight variations, but my view is that these 4 pillars should always be present, in tandem, in your framework. Without them you run the risk of leaving vale on the table.
Over the coming weeks I shall dig into each of the 4 pillars in detail and in doing so will hopefully provide you with some valuable takeaways to put into action from your office desk, home study, kitchen table or wherever it is you work from in today’s fast changing world! So, strap yourself in and I look forward to you enjoying the ride with me…!
In the meantime if you have any areas you do require support on, please contact me here or call me on +44 (0) 7834 452333 to understand how we at Marriage-Stanley & Associates can provide you with support that will drive commercial improvements and mitigate risk in your supply-chain.
James Cowley – MCIPS
Principal Associate – Marriage Stanley & Associates
24 Jul 2020
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