Supplier Relationship Management

SRM is a discipline of working collaboratively with those suppliers that are vital to the success of your organization to maximize the potential value of those relationships. SRM is about developing two-way, mutually beneficial relationships with your most strategic supply partners that deliver greater levels of innovation and competitive advantage than could be achieved by operating independently.

Why Suppliers???????
Because good quality materials are the basis of good products Because of major cost involved Because Sharing of information may lead towards Continuous Improvement Because Partnership may lead towards cost savings Because early involvement of supplier may bring lot of other options Because interest is common for both parties &Suppliers are the partners

Supplier Management

Supplier Pre-Evaluation
Price & Quality Capacity Delivery lead time, MOQ, Lot size etc. Logistic expertise Financial strength Quality system controls Policies & Procedures Current Customers Willingness to share technology & information

Supplier Post Evaluation

Annual performance Continuous plant audits System review through documentation Post evaluation due to any rejections

What is to be audited
Quality Management Personnel Corrective Action/Preventive Action Complaints System Document and Change Control Buildings and Facilities Equipment Purchasing Control Inventory / Material Control Production Process Control Packaging Control Laboratory Control

How to search Suppliers

Company records Yellow pages Catalogs (online and printed) Trade Journals and Trade Shows Advertisements Supplier and commodity directories The Internet Colleagues, professional contacts

Single Supplier
Outstanding quality More important customer more attention from supplier Opportunities for discounts or lower freight costs Can have concessions even quantity is small Easier to schedule deliveries JIT & stockless buying Focus on one, not many suppliers More reliable & shorter lead times Less risk in case of rejection

Multiple Suppliers
Always in bargaining position Lot of options resulting spot cost saving May have good quality Availability will not be an issue Abnormal volume requirement not an issue Lot of market info. Through multiple suppliers No long term relations/partnership

Supplier Characteristics
Flexible, reliable & sincere Believe in mutual benefit with win - win approach Follows commitments in crises Quality and continuous improvement cautious Believe in partnership Schedule conscious Stand for after sale service Zero defect philosophy Available to promise

Supplier Education
Inform & explain them about any change Suggest about any continuous improvement Explain them about the impact of on time delivery Educate about lot sizing, packaging etc Educate against their rejections Educate about cost saving at their areas

Supplier Ratings & Rewards

Supplier Rating Base

Cost Lead Time On time Delivery Supply Flexibility Lot Sizing Quality Pricing Terms

Supplier Performance Metrics/KPI

Key Performance Indicator (KPI) is an industry term used for the measurement of performance. KPIs are commonly used by an organization to evaluate its success or the success rate of a particular activity in which it is engaged. This statistical measurement gives organization a clear picture either they are on right track or not. Below are the areas of measurement related to Supplier. On time delivery Supplier defect rates / Quality Supplier Cost trend Internal customer satisfaction Lead time given to supplier as per agreed lead time Contract compliance

Supplier Feedback
Sustainability of delivery schedule Delivery lead time Availability of standard specification Response time / feed back against queries Reach to staff & senior management Settlements of bills as per terms Advance information about any change Sharing of information for improvements

Middle Man
- Time Saving - Less risk - But higher price - Easy to push locally available agents - Easy to find variety of manufacturers - Routing may take more time for urgent issues - Routing may bring confusions / miscommunication

Below have made alliances w suppliers

- Hewlett Packard
Eli Lilly Wal-Mart Dell IBM Unilever P&G Li & Fung