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.
The challenges of supplier relationship management
Obviously, as with most modern-day business practices SRM has become much more complex. Supplier management has gone through a huge transition over the last couple of years owing to growth in technology as well as the global scale of the economy.
Types of suppliers which a business is able to work with:
- Wholesalers and Distributors – Wholesalers buy large numbers of goods in bulk. Then, they resell these in reduced quantities for a higher unit price. These businesses usually offer the lowest prices as they are selling in large quantities and, as a result, are hesitant to work with smaller orders.
- Manufacturers and Vendors – These types of business are suppliers who are able to handle the goods of a number of different companies. The prices could be higher as opposed to those of wholesalers however they handle tiny orders from a vast range of manufacturers over a fairly short period of time.
- Import Sources – It is possible for domestic importers to work like domestic wholesalers and sell foreign goods to businesses.
The role of suppliers
Suppliers can actually have a massive impact on an organisation’s processes. This is because suppliers play a key role in driving revenue, something which should never be ignored. Being able to work with dependable, high-quality suppliers assist a business to grow at scale.
Your suppliers are your partners and it is this partnership which should be founded not only on financial transactions but also on shared trust as well as loyalty. Ensure that your suppliers have the feeling that they are a part of your business. Tell them about your processes, such the as releases of new products as well as promotions in addition to attending to their concerns.
It is the public relations responsibility to maintain strong as well as regular communication with each and every single one of your suppliers. Keep them frequently informed as well as up to date about your strategy in addition to your plans. This is so that they understand where they fit in as well as how they can assist, plan for and benefit from those plans.
Want to learn more about SRM in addition to other essential project management skills in the media industry. If so, then you really need to do our Project Management for the Media Course. Follow this link for more information.
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