It’s fairly common now for organizations of all sizes to be increasingly reliant on outside firms in the operation of their businesses on a daily basis, and for good reason. Strategic outsourcing allows firms to source business operations to specialists in a particular good or service so the firm can concentrate efforts and resources on core competencies. It’s also no surprise that suppliers have benefitted from this uptick in activity and spend. With this modern shift to outsourced operations, however, there is still a strong management requirement – a requirement that is often ignored or de-prioritized, much to the detriment of the organization.

Detriment? Imagine this. It’s Monday afternoon in July and you work for a bank. Looking out across town, your employees see a fire a few blocks away. A few hours later, the news reports that a local business had a fire that destroyed a portion of the building, but the name of the firm is being kept quiet for the time being. Thankfully no one is hurt. The next day, the news reports that the damaged firm is one that your business uses to outsource document and records management. You send a few employees to investigate internally to determine exactly what and how many files your company sends over for document storage. Still no word from the supplier on the extent of the damage. On Wednesday, it’s determined that damage was extensive and affected the supplier’s largest storage room in the building, but still no word on the volume and type of records sent over to the facility from your firm. 

The following week, you find out that the storage facility holds one million customer credit card agreements for customers who have at one time or another been delinquent. Upon further investigation, the root cause of the fire was a glass of water left out near a window which amplified the sun’s rays catching some nearby papers on fire. The fire suppression system in the storage room, which should extract all the oxygen and put out the fire, malfunctioned and was outside its required testing window. Without record of these agreements, principle and interest collection is unenforceable, resulting in millions of revenue lost and because the damages are indirect/consequential, you can’t hold the supplier accountable for your losses.

This is quite easy for me to imagine because this was an actual event.

You can probably imagine many fixes or ways to prevent such a disaster. None of those things happened. A properly implemented Supplier Relationship Management (SRM) system would solve this, as the system is as much about cultural shift in how you treat/manage suppliers as it is about tools and reporting.

Source One's experts are well skilled in conducting market analyses and developing the best practices and next practices your department needs to gain a competitive advantage by implementing a proper Supplier Relationship Management (SRM) strategy. As unbiased consultants with more than two decades of experience, we have worked with tens of thousands of suppliers and fully understand what is important to them in a client supplier relationship. Our experts can work with your procurement team to pass on the knowledge and skills necessary to better your organization's supplier relationship management program. In addition to developing a supplier management strategy, Source One can serve as your Supplier Relationship Management team to identifying revenue drivers, ensuring organizational alignment, mitigating risk, reduce management costs, and developing supplier relationships that will create real value for your organization.


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Bradley Carlson

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