Supplier Relationship Management is essential for any organization’s success, but it’s surprising how many fail to execute it effectively.
What are the common errors, and how can they be addressed?
Trent share his expert advice, offering actionable tips to strengthen your supplier relationships and drive results.
Find out what these tips are by watching the video below!
Rob: Supplier relationship management—it’s one of the key areas in supply chain management, but it often gets overlooked. We’re all very focused on the customer side, but we tend to forget about the supplier side. This week, we’re going to dive into SRM and explore why it’s so important. We’ve got Trent Morris with us to talk through it. Trent, great to have you back.
Trent: Hey, Rob! Good to be here again.
Rob: Last time you were here, we discussed procurement. SRM is a bit related to that but different. Could you give us an overview of what SRM is all about? Why is it so important, and how do we do it?
Trent: Absolutely. Supplier relationship management, or SRM, is incredibly important because it’s about managing your supplier relationships in a way that creates value for both parties. Think of it like account management—just as important as customer relationships. A lot of businesses make the mistake of not paying enough attention to suppliers after they’re brought on board. You get into a kind of “honeymoon phase” at first, but if the relationship isn’t actively managed, it can fizzle out quickly.
Once you’ve selected a supplier, SRM is about going beyond simply meeting the operational requirements. If you just focus on KPIs, you’ll only get the basic performance you agreed on. But SRM aims to make both sides invest in the relationship. It creates a “J-curve” effect—where the value generated from the relationship outweighs the costs. Suppliers become more invested, which brings extra value to the table.
Common Mistakes in SRM
Rob: So, what are some of the common mistakes people make with SRM? Do companies tend to measure the wrong things or maybe not communicate enough?
Trent: It’s a bit of both, actually. A lot of businesses focus on performance metrics like KPIs—things like 98% delivery accuracy or 99% on-time shipments. While these numbers are important, they miss the bigger picture. Suppliers bring a lot of expertise to the table, and SRM is an opportunity to tap into that knowledge to create better outcomes. It’s not just about meeting KPIs—it’s about building a relationship where both sides are working toward shared goals.
Communication is another big issue. Think about any strong relationship—whether with family, a spouse, or colleagues—it works best when there’s clear communication. SRM is no different. A good SRM framework includes regular meetings and touchpoints at all levels—strategic, tactical, and operational. These help both sides stay aligned, resolve issues, and improve the relationship.
Rob: So, it sounds like a structured approach is key. You mentioned the term “operating rhythm.” Can you explain what that is?
Trent: The operating rhythm is a structured approach to managing the SRM process. It’s about having regular meetings and touchpoints to make sure both sides are aligned and communicating effectively. This includes everything from day-to-day operational meetings to more strategic quarterly business reviews. An effective operating rhythm ensures that issues are tackled quickly, opportunities for improvement are discussed, and both sides can make the relationship work for the long term.
Evaluating Your SRM Process
Rob: That makes a lot of sense. So for companies watching this who might be wondering whether their SRM process is on track, what’s one simple thing they can do to assess it?
Trent: A good starting point is to look at your calendar. If you don’t have regular operating meetings scheduled with your suppliers—monthly, quarterly, or annually—then SRM is likely not a priority. Scheduling those meetings sends a clear message that you’re committed to the relationship. It’s a simple step, but it makes a big difference.
Rob: That’s a great tip. So who is actually responsible for SRM within an organization?
Trent: Typically, SRM is managed by procurement because it ties into contracts and supplier agreements. But operational teams are also crucial—especially when it comes to managing day-to-day aspects like costs, safety, and service levels. At the strategic level, you’ll want to bring together both procurement and operations teams to ensure everything is aligned and working toward shared goals.
Rob: Thanks, Trent! That’s a great summary and if you’re watching this, we’d love to hear from you. Do you have a formal SRM process in place? Let us know in the comments below. Thanks for watching, and we’ll see you next week!
Related articles on this topic have appeared throughout our website, check them out:
- 4 Tips for Effective Supplier Performance Management
- 3 Practical Metrics for Supplier Performance Evaluation
- Why 3PL Relationships are Fraught—And How to Manage Them
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated March 08, 2023, under the title “Supplier Relationship Management Tips“.
