The term ‘supplier relationship management’ (SRM), in simplest terms, refers to the interaction with, and managing of, third-party vendors which provide goods, materials as well as services to your organisation. It sounds easy enough: you select suppliers which are cost-efficient and easy to work with in order to maximise the value of the relationship. It is particularly important for media professionals to have a thorough understanding of SRM as media and marketing agencies need to engage with a whole host of suppliers in order for them to be able to deliver the finished product.
The history of supplier relationship management
SRM came to life in 1983 when McKinsey consultant, Peter Kraljic, called for corporate buyers to grow more proactive in supply management.
He argued that buyers should be looking to understand their categories’ risk as well as profitability impact on a company as well as devise supplier management strategies which best meet this need. These strategic partnerships assume a major commitment from a buying organisation. They require executive sponsorship, careful cross-planning and involve a great number of meetings. Managing these relationships demand substantial more effort than as opposed to other aspects in an organisation.