Frequently, a senior team will be responsible for the definition, negotiation, and agreement of contracts with suppliers. During this process, positive working relationships will be formed, especially with the winning bidder. Often the members of this team then move on to other “important” procurement and the ongoing management of the relationship with the supplier is passed to an administration function and the day-to-day communication left to the users of the contracted services. It is, however, the ongoing relationship with any supplier that really determines the level of service and benefits that are derived.
Unlike Contract Management, which will focus on managing a single contract with a single supplier, Supplier Relationship Management (SRM) will focus on a customer's relationship with one supplier across all of its contracts with that supplier, and also on the customer's relationships with all of its suppliers. In this way, SRM disciplines allow a customer to optimise its relationship across the board with a single supplier, and to drive improvements and learn lessons which are common to its entire supplier base.
Investment in high quality SRM will invariably result in major benefits in terms of performance and value received from suppliers and increased satisfaction from the users of the services. SRM consists of setting up all suppliers within the standard governance and management structures, including the joint customer supplier briefings of all users and stakeholders, regular face-to-face meetings to review delivery and commercial performance as well as resolve operational issues, and the maintenance of a joint development and improvement plan. Often forgotten is the power of regular peer-to-peer communication between senior management, which enhances the constructive relationship between customers and suppliers and can facilitate quicker and smoother resolution of major issues and problems. Also, it is imperative that the SRM function is staffed with good quality and well trained people.