You say that I need to implement SRM… Don’t you mean CRM..?

SRMClient – “So I should implement SRM in my business… Don’t you mean CRM?”

Me – “No, I mean SRM!”

The two lines above are part of a conversation that I had with a client recently. I thought it may be useful to post about it here…

“So I should implement SRM in my business… Don’t you mean CRM?”

Interestingly, whenever I speak to business about customer relationship management (CRM) there appears to be a clear understanding of what it is and how to go about doing it. The mention of what I term SRM however often results in the sort bewildered blank stare that says “I’m still here physically but mentally I’m in a warm and cosy place somewhere far, far away!”

So what is SRM and why is it important..?

Basically I consider SRM to be the management of the relationship between your business and your suppliers (Supplier Relationship Management). From my perspective, managing this aspect of the business is as important as managing any other aspect as the results can have a direct effect on the bottom line. An example of how using SRM can be of real benefit to your business appears below;

I have worked with clients that have a high ratio of suppliers to the number of products that they buy in. One of the common reasons for doing this, especially in small businesses is that the owners are always chasing the cheapest price for components so spend time shopping around on an almost daily basis trying to save a few pounds on every transaction. Wanting to save money on every transaction demonstrates good business acumen however the costs of this practice can potentially far outweigh any possible benefits. Let me explain further…

Whilst the businesses total spend may be significant, the amount being spread between each supplier remains relatively small. This can result in;

  • No real buying power with any supplier
  • An almost non – existent dispute resolution framework with any supplier
  • An overall relatively high supplier administrative overhead

When working with clients I discuss this in detail and outline a plan aimed at bringing about much more favourable condition. Having followed up with clients a few months afterwards, those that have taken my recommendations onboard report seeing the benefits, some of which may include;

  • Better buying power
  • Better communication
  • Improved credit terms
  • Swift dispute resolution
  • Co-operative marketing
  • Authorised repairer status
  • Invitations to new product launches
  • Reduced administrative overhead

Do you have many suppliers? Are you duplicating these and chasing the best possible price for each item of inventory? Could you substitute a particular inventory line for another? Do you continue to use underperforming suppliers?

If the answer to any of the above questions is yes then it may be time to review the relationships with your suppliers and commit to working more closely with some – and perhaps not at all with others.

I would welcome any comments or questions,

Andy Salmon

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