2. “Ongoing” Is The Magic Word: Once a supplier relationship has successfully begun, that is not the end of the game. To ensure ROI, continuous improvement, and risk mitigation during a supplier partnership, businesses have to remain as engaged as possible. To gauge the appropriate level of activity, Source One’s SRM Insights Report frames up how to approach the frequency of communication: “Not all suppliers require the high level of interaction offered through a comprehensive SRM program. Vendors that directly impact financial performance, affect the delivery of goods and services, have access to sensitive company information, and/or are associated with corporate regulatory obligations represent ideal scenarios for SRM.”
3. Scalability Is Paramount: Organizations must plan to scale up and down their interaction with suppliers based on how “essential” the relationship is to their core business. Whether a high or low priority, SRM can help retain savings achieved in strategic sourcing. In fact, without rigorous contract management, 75% of sourcing savings can disappear within 18 months.
- Is the relationship strategic to the business and important to growth?
- Does the supplier support the most important products or services?
- Does the supplier represent a significant expenditure?
- What is the risk of supplier failure?
- Are regulatory and security issues involved in the services provided by the supplier?
- Does the supplier offer specialized products or capabilities that offer a competitive advantage?
- What does the supply market look like?
- Is the supplier in a competitive vs. collapsed market?