The Olympic Games kicked off in Rio last Friday and the world is watching! The world’s best athletes compete on the global stage, hoping to bring home a haul of gold medals. So let’s take a look at world-class excellence in the world of Procurement. As Procurement rises in the business world and gains more attention, we’ve compiled our top three best practices that help Procurement go the distance. What makes world-class Procurement stand out from the rest?
Here are our bronze, silver, and gold Procurement practices!
Bronze medal: Supplier Relationship Management Plus
The finish line
What does world-class Supplier Relationship Management look like? Anyone who wants to build strategic supplier partnerships will focus on positive relationships with suppliers
beyond pure purchasing. What’s more, good SRM is the basis for tapping into supplier innovation ahead of your competitors. Understanding that they are valued and respected makes a supplier more inclined to invest in their relationship with a customer.
Not all suppliers are created equal. But for preferred suppliers, an improved relationship will be a “supplier of choice” experience, much like a “customer of choice” experience. The benefits are obvious: by treating a supplier as a “supplier of choice”, an organization is encouraging the supplier to treat it as a “customer of choice” and develop a better partnership.
The training program
But how can this be done?
Just like any Olympic training, supplier-of-choice relationships require careful planning and effort. State of Flux recommends measuring and monitoring how both the customer and the supplier perceive their working relationship. This can help you stay on the right track and avoid mismatching perspectives. They also recommend planning a relationship charter outlining what is acceptable behavior from both sides and what to do when things go wrong, as well as annual account planning. This is a significant amount of effort – but ultimately, it is a concrete investment in genuine strategic supplier partnerships.
Silver medal: Stakeholder Relationship Management
The finish line
When you ask: “what does SRM stand for?”, most people will tell you that it stands for
Supplier Relationship Management. However, there are two sides of the SRM coin. One of them is Supplier Relationship Management, and the other one is Stakeholder Relationship Management. Medal-winning Procurement does both, because it is uniquely placed between internal and external stakeholders. It connects these groups and enables communication. 83% of world-class organizations have dedicated liaisons between Procurement and the rest of the business. What’s more, these world-class organizations profit from 41% higher savings than those that don’t do this. (Hackett Group 2015). See Gold Medalist