Eskom Procurement Book 2015

SUPPLIER RELATIONSHIP MANAGEMENT

• Provides formal routes of engagement at different levels of management, allowing further supplier business opportunities to be exploited at senior levels. • Provides forums for discussing and resolving supplier issues, including escalation paths within both organisations, thereby preventing unnecessary conflict with buyers. SRM ensures that both partners communicate at high levels. • Creates room for limiting the influence of the buyer on the manner in which the supplier runs its operation. • Helps ensure that supplier capacity is matched efficiently with demand by sharing information pertaining to market trends and dynamics. • Streamlines supplier management processes, which leads to reduced internal costs. • Enhances the ability to focus spend on ‘strategic’ suppliers, which results in further leverage and efficiency. • Helps improve the development of supplier capabilities and the acceleration of value delivery. • Supports better supplier accountability for business results. • Reduces supply costs by between 5% and 15% by improving transportation and logistics, order processing, and storage, to name a few areas. • Improves implementation against delivery schedules and quality standards by giving the buyer the opportunity to effectively negotiate the scheduling of supplies as well as the expected quality of the supplies. • Improves joint objective setting, planning and collaboration with suppliers. The exchanges that exist between buyers and suppliers involve not just the procurement and supply of goods and services but a relationship that demands an honest partnership. Contemporary organisations have discovered that the way to gain the most value from their business partners is by enhancing their collaboration throughout their supplier base. This realisation has caused the concept of SRM to gain popularity among organisations of all kinds. In broad terms, the following are some of the major goals of SRM: • To streamline and make more effective the processes shared between an enterprise and its suppliers. In this sense, SRM is analogous to Customer Relationship Management (CRM) in marketing and Employee Relationship Management (ERM) in human resources management. • To enable an enterprise to improve its communication with its different suppliers; to share methodologies, business terms and information with them; and to improve familiarity with each other so as to optimise the supply process. • To ensure that suppliers familiarise themselves better with the core business of the enterprise and its different products so as to ensure a customised supply. A number of valuable benefits accrue to the buyer. For the buyer, SRM:

5.3.2 GOALS OF SRM

96 CHAPTER 5