The Infosys global supply chain management blog enables leaner supply chains through process and IT related interventions. Discuss the latest trends and solutions across the supply chain management landscape.

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Part One: Do we really understand SRM ( Supplier Relationship Mgmt) ?

I like statistics ……..Because it makes me think

1) 62% of Supply Chain operations did not have an accepted definition of Supplier Relationship Management in their organization

2) 50% of the companies having implemented SRM applications do not know how to measure the benefits of these initiatives.


I was equally confused as many others in the supply management function, of the various terminologies that are used interchangeably for the same sourcing and procurement processes e.g. supply management , supplier relationship management , strategic sourcing , spend management , supplier performance management .

I opted for a deep dive and surfaced more confused than ever. Depending on who was talking SRM the definitions also kept changing – product vendors have an application centric view; consultants talk transformation or implementation approach, and buyers look at this as managing categories and transactions.

Till I came across a white paper by Pierre Mitchell and understood the concept in a jiffy.

1. Supplier Relationship Management ( SRM) – Externally Focused ( Help me help you, [ to help " us"])

2. Spend Management – Internally focused operations - Show me my money

3. Supply Management – Customer fulfillment directed

4. Supplier performance management (SPM) - one-sided vendor performance management process or BI implementation focused.

I quickly tried mapping the KPI’s for each of these situations and realized how the same set of processes ( and leading buyers response ) could react differently to the variance in focus with the above 4 situations.

We decided to refine (re-define) our definition of Supplier Relationship Management.

Supplier Relationship Management" is a collaborative win - win business discipline of strategically managing the supplier engagement process to maximize the potential value of those relationships by providing seamless integration capabilities for smooth harmonized operations and aligned business goals with the partner supplier community.

With majority of the value chain of typical manufacturing organizations lying in the extended enterprise area of their supply chain and beyond the typical traditional internal strategic investments within the company’s span of control, we see that a " true" SRM program is a major competitive strategy organizations could strive for to expect major bang for the buck.

Joint goals leading to organizational performance 

Figure: Joint SRM KPI's with suppliers leading to overall organizational performance.

The challenge for organizations is really to guide this external focused collaborative theme to be enabled by the typically internally focused processes and the existing SRM technology applications that may not address this philosophy in totality on its own. Getting to the depth of this business vision and having a detailed solution plan to connect the business objectives ( & related now changed performance measures ) to each of the technology enabled business processes scenarios can make this happen.

Let us try to discuss some solution possibilities in the following SRM series. Meanwhile , look forward to your experiences and thoughts .


1) Purchasing Must Become Supply Management by Pierre Mitchell.

2) Companies Are Confusing Supplier Performance With Supplier Relationships, State of Flux


Nice perspective. some views can cause further confusions. One key pattern emerging these days is " Supplier as a Customer" - ie, what would an organisation want to do if they were to treat their suppliers as though they were their customers. ? More so, this trend is observed in service industries - Imagine a Bank or an insurance giant - any supplier / contractor / vendor walking into their premises can be a potential customer. With this, how do we now look at SRM ? Needs a long debate i guess.

Hey Kris, Nice thought , I agree in this widely networked and dependent world it is common to have suppliers as customers who would need a differential treatment in SRM . One tactic would be to neatly tie the strategic supplier account plan to client accounts plans . You mentioned some view could lead to more confusions . I would really like to hear more on this

Hi Pradeep, good points you've laid out. As an SRM consultant on the ground has a post implementation hunted you down, typically those really tough ones from the customer.
Dont know if you've read my experience on such a situation pertaining to "proving all the ABC's of gyaan giving on the SRM processes vis a vis a promised pre-implementation bottom-line metrics", I have and its still a challenge today, to acertain that difficult to design scorecard.
Please read this and if we can arrive at such a strong and promising KPI scorecard POC or if we have one canned, we can actually prove the success indices of the SRM processes we go ga-ga about...just a thought

Whatever it is it has to be real, Great Tridip, We have been thinking on similar lines , wonder how I missed your blog earlier
Managing value from discovering, implementing and realizing is a journey and metrics are one important part of this .
The value opportunity is as good as the weakest link in the existing processes and are specific to the client .
Sizing this opportunity in a good business case and following this up the right process design, business enablers and value governance processes ensure the clients get the best bang for the buck
Infosys Value Realization method is a good process to acheive this path. Let us discuss in detail how to enable this in SRM in the next blog

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