PROCUREMENT
EFFECTIVE SRM : COMMUNICATION , INNOVATION AND VALUE
Procurement professionals must move beyond one-way transactional sourcing to deliver the necessary value to emerge stronger from unprecedented disruption
WRITTEN BY : RHYS THOMAS
There is a natural knee-jerk reaction to undervalue the importance of soft skills in technical fields like procurement and supply chain management . It ’ s an understandable position to take : why prioritise communication or the ability to build relationships when in practice contracts are often contingent upon cost , balance sheets and KPIs ?
But the days of one-way , transactional supplier relationships are numbered . Modern , successful procurement functions live or die by the strengths of their relationships , both with internal stakeholders and , most importantly , their ecosystem of external suppliers . Organisations have been made actually aware of that fact during the COVID-19 pandemic , when shortages , bottlenecks and fluctuating prices have become business as usual .
“ If the last year has taught us anything , it is the need to manage disruptions and build resilience with agility across our supply chains ,” says Ambeshwar Nath , VP & Regional Head , Consumer , Retail & Logistics – Europe , Infosys . “ This cannot be done alone considering the myriad of suppliers across the value chain that we need to work with in order to deliver goods to their doorsteps .”
Perhaps more than any other supply chain function , Supplier Relationship Management ( SRM ) has become a core competency in ensuring procurement organisations remain effective . Duncan Brock , Group Director , Chartered Institute of Procurement & Supply ( CIPS ), believes it is now more important than ever that organisations build strong relationships with suppliers , not only to ensure they fulfil contractual obligations , but to understand and support them through disruption .
“ If your suppliers fail , you fail , it ’ s as simple as that ,” says Brock . “ As businesses found during the pandemic , finding alternative sources for goods that failed to show up wasn ’ t easy . If you ’ re sourcing halfway across the world and expect to find sources closer to home , that is not always possible .”
What is Effective SRM in Procurement ? Effective SRM must follow four key principles : effective communication , fairness , transparency and respect , says Nath . Ultimately , it must be equitable and two-way .
“ An effective supplier relationship management is one that is bi-directional and
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