Eskom Procurement Book 2015

SUPPLIER RELATIONSHIP MANAGEMENT

product without a supplier development programme in place, the buying company will not be able to benefit from the advantages of the new product.

5.3.4.10 Buyer versus Supplier

In certain cases, owing to the multi-faceted nature of buyer-supplier relationships, suppliers may have more bargaining power in the relationship. They may also demonstrate a higher level of shrewdness, which could enable them to dictate the terms and direction of the relationship as they seek to protect their positions. Care should be taken to ensure that the influence of the buyer and key suppliers is well balanced. The relationship should add rather than remove value and the outcomes of the relationship should serve to satisfy the needs of both parties. Many organisations do not have the systems and policies that support effective SRM. Consequently, SRM is implemented manually and haphazardly. This makes it difficult to improve the performance of suppliers and relationships that are inefficient and costly to manage. Where systems and policies exist, they are fragmented and ineffective. Experts should be consulted to assist the organisation in establishing and implementing suitable SRM systems and policies. In cases where these already exist, it is important to ensure that they are streamlined to stimulate improved SRM outcomes. Successful SRM can only be implemented when the organisation is able to group its purchases by category of importance and complexity. This step contains the implicit requirement for the firm to know all about the products/services or material that it intends to buy. How much of what is being bought, from whom, by which purchasing agent, at what prices, and with what results must be a part of the stake. SRM can only begin when the firm thoroughly understands what it intends to purchase; and when it has conducted the standardisation necessary to make certain the categories of purchase represent what they should contain. The matrix illustrated in Figure 5.3 is a typical classification of purchase categories that the organisation has to understand. The following steps are widely regarded as part of best practice in the implementation of successful SRM [5].

5.3.4.11 Lack of Systems and Polices

5.3.5 KEY STRATEGIES FOR SUCCESSFUL SRM

5.3.5.1 Segmented Supplier Base

Suppliers are categorised into different levels or ranks. This will allow the organisation to better understand the suppliers that it should concentrate on. Supplier classes could, for example, include suppliers who are tactical, approved, preferred and strategic. Suppliers are ranked using criteria such as the criticality of the products/services bought and the volume of spend (amount of money

101 CHAPTER 5