Introduction

What is SRM?
- Comprehensive approach to managing enterprises
interactions with the organizations that supply the goods
& services.
- Streamline the processes between enterprise and its
suppliers.
- First developed for automotive industry in 1990s.
- Ex: North America prefer China due to its low cost
sourcing (strategy)
 Benefits
Increases efficiency of processes.
Enable effective communication between an
enterprise and suppliers.
Continuous improvement of operations.
Reduction of inventory
Better quality of end product
Improved on-time delivery by suppliers
 Supplier relationships
Transactional Contract Partnering Alliances
Focus on timely Binding agreement. Customized Obtain better
exchanging product Binding two parties business purchase prices
at highly or more. relationship from suppliers
competitive.
The relationship Work closely Focus on Two or more
can be adversarial together on an communication business
ongoing basis under across all levels organizations
certain conditions cooperate to help
that benefits both achieve long term
parties. goals .
Low or non existent Mutual respect Only provides Pursue mutual
level of must have critical resources benefits.
involvement when required
Little or no cooperation or
collaboration collaboration
Transactional Contract Partnering Alliances
Mostly used by Mutual trust and Collaborative Resources such as
companies. developed products,
distribution
channels,
manufacturing
capability, project
funding, capital
equipment,
knowledge,
expertise, or
intellectual
property
Overcome challenges of establishing SRM
Select the right partners
Strategic and financial fit, consider differences in corporate culture,
operating model and business practices.
Align internally and externally
Clear alignment with stakeholders across all levels & focus toward
entire network of strategic suppliers.
Establish mutually beneficial relationships
Negotiate a win-win deal for both parties
Select meaningful KPIs and share information
Select measures that relevant
Ensure information flows in both directions
Commit to change
Entering any strategic supplier relationship will result in changes
 Trust-based vs. Power-based relationship
Trust-based relationship
Partner will act as agreed upon in
common agreement.
Long term relationship
Better supply chain performance, cost
reduction due to lower transactional and
administrative cost.
Lead to more responsive in supply chain
Offer assistance and support
3 types of trust: contractual trust (hold
upon agreement), competence trust
(perform to agreement), goodwill trust
(deal with partners intention).
Power-based relationship
Other party can be forced to act as
desired.
Firms that have scare resources have
power over other firms
Ability to influence other party to act as
desired.
2 categories of power: coercive (use
threaten/punishment sanction), non-
coercive (provide or withhold reward to
promote the desired behaviour)