Eskom Procurement Book 2015

SUPPLIER RELATIONSHIP MANAGEMENT

5.3.3 COMPONENTS OF SRM

Various elements are involved in the interplay that constitutes SRM:

5.3.3.1 Determining the Need

This element defines the context and purpose of SRM by specifying its purchasing/sourcing need. Some of the common types of sourcing needs are listed in Table 5.1.

Table 5.1: Sourcing needs for SRM. The need for SRM Consistency and predictability of supply and delivery

Motivation

SRM may be implemented to ensure that supply of materials is consistent and predictable. This is important in ensuring that the production process continues in an uninterrupted manner. SRM may be implemented in order to obtain sustainable prices of materials or services from suppliers as well as to ensure that the entire purchasing process is cost effective. SRM may be implemented to ensure that transactions with the suppliers are executed with ease, clarity as well as within a reasonable time frame to facilitate the viability of the enterprise. SRM may be implemented to stimulate organisational innovation as the buying enterprise learns from the expertise of the supplier. SRM may be implemented to enhance the quality of the materials/ services bought from the supplier, which ultimately enhances the quality of the outputs from the buying partner.

Pricing and costs

Efficiency (speed, simplicity and transparency) of the transaction

Innovation

Quality

The list in Table 5.1 is not exhaustive as there are many sourcing needs. However, a common trend is that once the main SRM goal has been established between a buyer and a supplier, the partners move on to satisfy other unmet sourcing needs. Usually, the shift in emphasis is dictated by market and supply dynamics.

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