Eskom Procurement Book 2015

SUPPLIER RELATIONSHIP MANAGEMENT

worldwide. Other data-aggregation and enrichment tools are also providing greater insight into procurement trends and best practices. According to its proponents, the use of SRM software can lead to lower production costs and a higher quality, but a lower-priced end product. SRM products are available from many suppliers in most markets.

5.3.5.5 Improve the Skills of Procurement Staff

SRM is a supplementary responsibility that requires an extra set of skills from supply chain practitioners. However, most staff members usually do not have the requisite SRM skill sets, such as a creative mindset, account planning and the ability to work cross-functionally. It is, therefore, necessary to train procurement staff in order to equip them with these skills. In addition, new talent that has the necessary know-how can be brought in to reinforce SRM efforts.

5.3.5.6 Measuring the Benefits

The value derived from SRM initiatives should be quantified to ensure that the benefits of SRM are neither overlooked nor underestimated. For instance, by measuring the benefits, it will be easier to quantify cost savings, and to assess whether products are getting to the markets faster. By measuring the benefits, the organisation realises the true extent to which SRM is adding value to its operations.

5.3.5.7 Engage Suppliers

SRM is about creating business synergies with suppliers. As much as the buying company must strive to improve its own SRM capabilities, a need exists to balance the equation by dealing with the supplier side. Therefore, it is fundamental to engage suppliers so that the same efforts being made by the buying organisation to improve its SRM can be made by the supplier. It is also important to listen to suppliers and follow their counsel. This will make the buyer organisation a more attractive business proposition, leading to the development of trust that is very important in nurturing synergistic buyer-supplier relationships.

5.3.6 MEASURING SRM

It is important to measure the performance of an organisation’s relationships with its suppliers. When relationships with suppliers are assessed, it will be easier to find ways of improving them, based on the results of the assessment. There are several performance approaches, but for the purposes of this discussion, only two will be discussed briefly.

5.3.6.1 Means and Target System

The means and target system is a simple method of measuring the effectiveness of the relationship between buyers and suppliers. Targets illustrate the extent to which the company is achieving its goals. Examples of targets include price, cost, delivery schedules, order cycle times, time to market, quality, etc.

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