Supplier Relationship Management
Firms in a wide range of industries are recognizing the need for more agile and resilient supply chains. Forward-thinking organizations are re-envisioning how they manage and interact with upstream trading partners. They are working to find new ways to maximize the positive impact and value of their interactions with strategic suppliers. Companies are looking not only to reduce costs, but to also drive quality improvements, reduce risk, and unlock additional value that stems from fostering close supplier relationships and tight-knit collaboration across supplier networks.
The most effective supplier relationship management teams continually improve supply chain performance, reduce or mitigate supply chain disruptions, and establish and maintain lasting relationships with key suppliers—mutually-beneficial connections that give them a competitive advantage.
Supplier relationship management as business strategy and means of creating value
Companies that carry out effective supplier relationship management strategies can realize significant benefits, such as the ability to rapidly adapt to sudden changes in supply and demand, and more accurate supply chain planning, which can help companies accelerate time to market and ensure continuity of supply.
Through close-knit supplier collaboration, supplier relationship management teams can build a foundation for continuous improvement, gain an edge on the competition, and prepare the business for the future.
Learn more about how to build an agile and resilient supply chain. Download the eBook: What You Must Know to Survive a Supply Chain Crisis: 5 Priorities from 4 Industry Experts.
Key activities involved in supplier relationship management
Supplier relationship management is implemented primarily through these four key activities:
- Supplier segmentation: Identify strategic partners, or priority suppliers, based on relationship value to optimize resource allocation.
- Supplier relationship management governance: Define a shared strategic roadmap and establish an effective governance structure.
- Performance management: Establish measures and processes to effectively track and manage supplier performance.
- Supplier development: Develop capabilities to help suppliers drive value and execute joint business development projects.
The combination of digital supply network and multienterprise work management technology is a powerful tool that can help supplier relationship management teams more effectively drive and manage these critical business activities.
Getting supplier relationship management right
Effective supplier relationship management depends on the ability of an organization and its suppliers to share data and insights across the value chain. They must establish easily accessible and efficient channels of communication and make all the necessary information available to supply chain partners. Everyone needs to be on the same page to fuel trust and enable successful collaborative endeavors.
One of the easiest ways firms can improve supplier relationship management is through the use of a cloud-based digital supply chain network and multienterprise work management software. This technology helps businesses—along with their upstream and downstream trading partners—integrate and consolidate data across systems, facilitate collaboration, and achieve greater visibility across the supply chain. It can help firms evolve their approach to supplier management from one that is manual and reactive to one that is digitized, highly efficient, and proactive.
Supplier relationship management in pharma made simple
TraceLink's network-based collaboration software is designed specifically for the unique needs of pharmaceutical companies and their supplier networks. Multienterprise work management solutions from TraceLink help to improve the performance of supplier relationship management teams and pharmaceutical supply chain management leaders. Multienterprise work management from TraceLink is the resource supplier management teams need to orchestrate shared work across different functions inside and outside of the organization.
Using network-driven multienterprise work management software, supplier relationship management teams in the pharmaceutical industry can overcome the challenges of poor supply chain visibility, the need for greater supply chain resiliency, and sub-optimal OTIF delivery performance. Leveraging TraceLink's solutions for the pharmaceutical supply chain, companies can eliminate inefficient manual processes, dismantle data silos, and enable various stakeholders to work together within the same secure application.
More effective collaboration results in faster, smarter decision making and lasting supplier relationships that contribute to cost savings, higher quality products and services, and disruptive innovation. As an emerging best practice in healthcare, supplier relationship management is helping to ensure product availability, reduce risk, and create value-added partnerships across the healthcare supply chain.
Learn how pharma companies are building resilience to supply chain disruptions. Download the IDC Whitepaper: Solving the Pandemic Pharma Supply Chain Struggle.
Supplier Relationship Management FAQs
What is supplier relationship management?
Supplier relationship management teams are charged with managing a company's entire supplier network, ensuring the quality of products and business processes, and working collaboratively with suppliers to drive innovation.
What are the benefits of effective supplier relationship management?
The benefits of effective supplier management include reduced costs, fewer disruptions, higher-quality products, a reduction in drug shortages, more efficient business processes, and improved patient outcomes. In addition to helping improve supplier performance, effective supplier relationship management enables firms to create a more efficient, agile, and resilient end-to-end supply chain.
Why is supplier relationship management important?
Supplier relationship management is critical for enabling continuous improvement of operations, fostering joint business development and innovation, and creating a more agile and resilient supply chain. It helps organizations reduce the risk of supply chain disruption and achieve a competitive advantage as a result of their collaborative efforts with upstream trading partners.
What activities are involved in supplier relationship management?
The four main activities are: supplier segmentation, supplier relationship management governance, performance management, and supplier development. A firm will start by identifying its strategic partners or key suppliers, developing a strategic roadmap in coordination with those suppliers, and establishing a contractual agreement defining its expectations for supplier performance. An organization can then work more effectively with its strategic suppliers to drive value across the supply chain.
What is the difference between vendor management and supplier relationship management?
Vendor management is focused on short-term objectives and simple metrics while supplier relationship management emphasizes long-term initiatives, strategic alliances, and joint business development. The latter results in more transparent, trusting, and value-creating buyer-supplier relationships.