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Supplier Relationship Management, SRM

SRM (Supplier Relationship Management) is an enterprise's activity aimed at improving the level of procurement management, developing a strategy for interacting with key suppliers, optimizing business processes, and then analyzing the results.

SRM implementation is usually carried out in three stages:

  1. Supplier segmentation. It can be carried out in an automated mode based on the calculation of personal criteria and the results of the collection and classification of the most accessible information. All information about suppliers is presented in a visual form so that employees can quickly and easily find the data they need. An important point is the allocation of key suppliers, on the relationship with which profitability and risks of the enterprise depend.
  2. Development of a strategy for interacting with suppliers. It is not worth spending significant resources to manage relationships with "transactional" suppliers who supply low-value and easily replaceable goods. But one should pay maximum attention to strategic partners supplying materials and components important for production, especially if the choice among such suppliers is small.
  3. Implementation of the strategy of relations with suppliers. Strategic partners require special care and attention. Suppliers and customers of this level should be aware of each other's plans. This may even include providing confidential business information to partners so that they can prepare and plan actions in accordance with the customer’s long-term strategy.

As a result of the introduction of SRM, one can provide:

  • creation of a unified information database of suppliers;
  • cost reduction by combining all the needs of the company;
  • shortening the procurement cycle and, as a result, reducing the company's logistics cycle;
  • optimization of labor costs;
  • the attraction of additional sources of raw materials;
  • increasing the loyalty of already attracted suppliers;
  • creation of opportunities for a full-fledged analysis of needs, allocation of time for coordination and conclusion of contracts;
  • securing responsibility and a certain round of duties for each of the employees;
  • involvement of the supplier in the company's internal business processes;
  • the ability to manage the supply chain;
  • increased procurement transparency for internal and external auditors;
  • creation of increased interest among suppliers in winning the competition;
  • getting really the best deals from suppliers;
  • an increase in procurement savings and reinvestment of funds in infrastructure development;
  • increasing the degree of cost control;
  • increasing the speed of workflow;
  • easy integration of this class of systems with ERP systems that are already implemented.
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