sample-strategy-guide-SRM-0613_1.pdf

It is not something that can be implemented without a

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It is not something that can be implemented without a fundamental change in Procurement, the organisation it serves and the suppliers involved in the new approach. Whilst the new ways of working may be Procurement led, they require the active and honest engagement of all those involved. Building structured and managed relationships that balance long-term objectives with shorter-term requirements will require flexibility on both sides if it is to be successful. It does not mean reducing the power of the organisation. Rather, it means working as part of a network to ensure that the value of each player is leveraged toward the needs of the end customer and of each organisation within the supply chain. JUNE 2013 2
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OBJECTIVES: As with many procurement activities, at the most basic level, SRM can be used to reduce both prices paid and costs to the organisation. By developing appropriate styles of interaction, even adversarial ones, it is possible to save money. Suppliers have expectations as to how the customer will act and are often positioned to respond in kind. Key to developing an SRM approach is a well understood supply base. As the customer organisation develops its own maturity and inward understanding, it becomes possible to develop more value adding capabilities to the relationships that are being nurtured. Initially this is often at the product or service level, but as the customer organisation progresses this often expands to include an evaluation and sourcing strategy based around the provision (internally) of core competencies and (externally) of non-core competencies. Whilst the above focuses heavily upon inward reflection, it quickly becomes just as important to understand what the supply market and individual suppliers are capable of delivering to the organisation. A successful relationship strategy will carefully differentiate between internal and external provision in a way that does not compromise or compete with the other. At this point the emphasis is on aligning organisations in order to ensure that products and services flow through the supply chain and network toward the end customer. The concept of flow (both value and physical) brings into focus the need for stable and capable processes that perform over time. The propensity of many organisations is to improve through programmes, often driven by sub-optimised Lean and Six Sigma approaches that butcher the enterprise into neat packages in an attempt to demonstrate quick wins and ‘progress’. High performing organisations have high performing supply networks and this comes from the alignment of objectives and approaches to how things are done across the entire enterprise. By knowing what is expected, suppliers are able to manage their own businesses for the long term. Not only is this more cost effective, it is also more robust from an operationally competitive perspective.
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