Effective supplier management has never been more necessary for procurement leaders looking to mitigate risk and ensure continuity for the business. More than a year of unpredictable demand and volatile supply chains has exposed the need for tighter collaboration and more strategic supplier partnerships.
In a study by Harvard Business Review, 95% of business leaders reported that their sourcing and procurement processes were disrupted because of the pandemic. And while the vast majority of procurement leaders agree that supplier management plays a key role in business continuity planning, only 21% report having strong supplier data analysis capabilities.
Add to these challenges recent human rights legislation and steadily increasing inflation, and procurement leaders’ list of responsibilities is ever-expanding. On the one hand, legislation like the General Data Protection Regulation and Australia’s Modern Slavery Act are requiring sourcing teams to gather more supplier data than ever before to ensure responsible sourcing practices. And on the other, the U.S. Consumer Price Index is the highest it’s been in over a decade, leading to increased costs for suppliers and procurement teams alike. Plus, with supply chain issues expected to last through early 2022, procurement leaders must be empowered to make data-driven decisions to alleviate stress on their value chains. Teams with effective supplier management programs can better communicate with their vendors, plan strategically for the future, and drive necessary innovation.
In a world where remote and hybrid work has become the new norm, keeping in sync with supplier partners spread across geographies is no easy task—yet it is critical to the business. So how can procurement leaders partner with their suppliers while also balancing business needs?
Leading procurement teams that prioritize supplier relationship management (SRM) are better equipped to adapt to uncertainty and thrive despite disruption. With unpredictable supply chains and changing consumer habits, it’s essential that sourcing leaders build their SRM strategy with the following in mind.
While the vast majority of procurement leaders agree that supplier management is a key driver of business continuity, 4 out of 10 report that they do not include supplier management in planning. As 2021 comes to a close amid supply chain issues that some people fear will put a damper on holiday cheer, business leaders should put better supplier management tools at the top of their wish list.
Procurement teams with robust supplier management systems are partnering with their suppliers to achieve key business goals like supplier diversity, strategic cost savings, and more spend under management. How can you build out your program and set it up for success?
Building an SRM program from scratch can be intimidating, no doubt. In one case, a leading financial services company had to reverse-engineer its SRM program using existing slide decks containing supplier performance data.
But, as the company scaled, it was able to centralize and automate this data, leading to better visibility across the organization as well as actionable insights into supplier relationships. In other words, with the proper preparation and proactive engagement with the business, you can create an effective strategy that strengthens relationships and drives performance.
Interested in learning practical tips for creating an SRM program from scratch? Check out this Guide to Supplier Management and explore the seven steps you can take to ramp up your SRM.
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