Supplier management software does not focus on just one business application. It is a composite of different activities covering a range of activities carried out by a diverse range of people within organisations.
It is therefore difficult to acquire one piece of technology that covers all bases. Some of the activities currently covered by the term SRM are as follows:
- On-line procurement
- Supplier on-boarding
- Running commodity auctions
- Risk management
- Contract Management
- Category and Spend Management
- Project Management
- Supplier Metrics and Performance management
The following are 5 tips in successfully assessing and implementing SRM:
- Understand the diverse assortment of supplier management tools available in the market. Manufacturers need to understand all of the supplier management tools that exist today. These include individual supplier information management (SIM) tools for basic data collection and workflow, supplier performance management, supplier risk management, spend and supplier visibility as well as broader suite components including supplier relationship management (SRM), e-sourcing and contract management.
- Rise to the analytics challenge. Many companies believe that they collect enough supplier information already. While this is not typical, even in the best case, for those organizations that have access to significant amounts of data, it’s doubtful that the bulk of the insights contained within it never surface. Organizations need to put in place an analytical/business intelligence (BI) infrastructure to make better decisions based on the supplier management data available to them.
- Integrate supplier management software with transactional and strategic decision tools. Supplier management cannot be a silo. Companies must strive to integrate both transactional and decision- support procurement tools with their supplier management tools. If manufacturers do not have the ability to act on supplier information in the context of routine tasks or important decisions, then they will have wasted all of their supplier management software efforts.
- ‘One shoe fits all’ maybe not the case in this instance. In other words, move beyond the ERP vendor “master.” The concept of a single supplier system of record is almost laughable given how much supplier information is contained outside of an organization. It’s critical that all of the source systems come together to create a true picture of your supplier.
- Don’t forget integration with the back-end. Given the number of back-end transactional systems that interface with supplier management tools (shop-floor ERP/MRP for quality and on-time performance information), it is essential for IT leaders to develop a supplier management systems integration strategy that takes into account all of the internal and external source systems that a company will need to pull from and push information into.