Supplier relationship management (SRM) is an exercise focused on building, managing, and nurturing business relationships with vendors. It involves analyzing those relationships and strategizing to improve the overall performance in a manufacturing environment with better communication, management, and execution.
Each vendor supplying something to a business is evaluated to determine which one is most important for continuity and performance. Managers can cultivate better relationships with vendors supplying goods and services through these evaluations.
A business may appoint supply chain relationship experts to manage the relations between the company and suppliers. Due to their role in selecting suppliers, project management, and operations, supply chain relationship experts frequently communicate with vendors. It is for this reason that SMR is often called supply chain management. This practice is similar to the process of vendor management and procurement.
Consumers don’t like to see their products' costs rise due to volatile commodity pricing. Supplier relationship management helps businesses to mitigate such risks to a considerable extent. With transparent communication and friendly relations with suppliers, a company can set prices for materials for the long-term that do not get impacted by the price change. Often, vendors offer fixed pricing if the manufacturer signs a long-term contract.
Manufacturers and suppliers need to build a mutually beneficial relationship that is formed on trust and allows feedback and ideas to flow freely. It is an ecosystem in which communication improves competence, streamlines processes, and improves customer service. Supplier relationship management helps businesses improve performance on the supply side.
Explore more about GEP’s supplier relationship management software.