Manage Supplier Relationships for More, Better Access

Supplier relationship management (SRM) has begun its comeback, believes Rich Parker, the Minneapolis-based vice president of global marketing for Infor (www.infor.com), a provider of enterprise business solutions.

Excitement and expectations characterized SRM’s launch in 1999 and 2000, he notes. “But after the economy crashed, we went through a trough in which people believed that SRM products couldn’t do anything.”

What’s hot now with SRM, especially in process areas, are strategic sourcing, contract management, category management and procurement of complex services, says Dion Graham, a Los Angeles-based vice president for SRM at enterprise software giant SAP AG (www.sap.com). Calling SRM a holistic process, he sees its core foci as electronic-procurement, contract management, sourcing, global spend-and-analysis and master data management, as well as supplier collaboration.

So why use SRM? To produce quality metrics and build tight relationships in some larger supply-chain context, answers Rick Veague, chief technology officer for enterprise solutions vendor IFS North America (www.ifsworld.com), Schaumburg, Ill. From a traditional manufacturing perspective, industry has squeezed out as much efficiency as it can, he believes. Thus, if manufacturers want to improve operations, “then becoming faster doesn’t have nearly as much impact as having more and faster access to suppliers and customers,” Veague contends.

Service to customers

It’s this delivery of quality goods and services to customers that makes SRM important, says Tom Anthony, senior director of product strategy for Oracle Inc. (www.oracle.com), the heavyweight enterprise software supplier based in Redwood Shores, Calif. “One of the key things in an organization is the real-time nature of supply chains. That drives the need for communication and seamless collaboration with suppliers, who are typically external to the enterprise,” he states. Thus, what used to be one big company providing all facets of their goods to customers has changed, Anthony notes. “And the importance and strain that puts on the need to have closely knit collaboration with customers is even more important.”

Many organizations find collaboration is key to supply-chain relationships, says SAP’s Graham. The solution that companies use is a Web browser. “This is where the market is going,” he observes. It’s a practical, extremely low-cost solution, one that significantly reduces barriers suppliers have to enter into new business and to improve customer collaboration and satisfaction, Graham adds.

The use of the Internet and eXtensible Markup Language (XML)-based communication help decrease supply-chain latency, Anthony believes. But he estimates that fewer than 15 percent of suppliers can provide XML-based system-to-system communications with their clients. Calling that an amazing problem, he agrees with Graham that the approach most companies now take with suppliers is Web-based portals.

Those portals bring three things to the relationship, Anthony explains. First, the portal pulls together transactional elements such as orders, as well as collaborative efforts such as requests for proposal or requests for quote. Next, the portals give visibility to real-time metrics—either performance metrics or key performance indicators—that help suppliers improve their businesses. “This (portals) is a technology that allows materialized views that can drill down to the transaction,” he says. Finally, actions and alerts can be guided through portals. “If something is trending out of tolerance, I might want to notify people, rather than wait for it to go out of tolerance,” Anthony asserts.

Despite its benefits, though, SRM still has a lot of room to grow in industry. Infor’s Parker estimates its acceptance may not even exceed 5 percent. But there are no real barriers to entry for someone who wants to do SRM, declares Veague. “What’s holding up the adoption of SRM technologies is simply the will to do so.”

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