Implementing an SRM tool Implementing an SRM tool Business value & key success factors Perfect Club 25 April 2013
The functional Purchasing Information System loop Spend analysis Spend analysis Invoicing Invoicing Supplier Supplier relationship relationship Delivery Delivery management management Purchasing Purchasing performance performance Ordering Ordering Commodity Commodity Common Common Purchase Purchase Purchase Purchase strategy strategy strategy strategy master master master master request request data data Action plan Action plan Contract Contract monitoring monitoring compliance compliance Contract Contract Needs Needs elaboration elaboration specification specification Supplier portal Supplier portal Buyer portal Buyer portal Negotiation and Negotiation and Sourcing Sourcing selection selection E-RFx E-RFx 2
What stands for Supplier Relationship Management ? 3
Which business value for SRM tools ? • SRM tools implementation facilitate the creation of a shared & common data base within the company – SRM = Supplier knowledge management tool – But not only … 4
Four key stakes to implement an SRM tool Value creation Supplier Supplier Risk Risk SRM development management Knowledge management 5
At first SRM is not a tool but a process • SRM tools are enablers to dissiminate within the purchasing organization – and moreover within the company- the best practices related to the management of key suppliers 6
The supplier lifecycle management process Customer example Supplier Portfolio Category management Procurement Dashboard Needs to source Strategic Supplier ... New Supplier Relationship management prospect Supplier Risk management Risk management Supplier Supplier Supplier referencing delisting management Performance management Supplier panel management Supplier Information lifecycle management Supplier request Active Suppliers management Supplier Portfolio Yearly Analysis management 7
The deployment of SRM is not a quiet journey • First it requires a good level of purchasing maturity • The issues are : • How many suppliers are concerned ? • Who will do the job ? Update of information & data • Who will facilitate the process ? 8
Suppliers categorization is a key point Suppliers categories need appropriate SRM approaches Customer example Business 5 suppl. development Strategic Advanced SRM Long term 200 relationship Preferred Supplier panel management Performance 1 500 Core Suppliers monitoring ~ 10 000 Basic Suppliers Transaction Active Suppliers > 50 000 9
Objectives and value proposition for SRM Customer example SRM pursues 4 main objectives • Managing supplier in smart way to maximize benefits • Build a consolidated and shared view of suppliers to mitigate risk at Group level • Implementing optimization action plans and monitor results • Implementing optimization action plans and monitor results • Defining and sharing roles and responsibilities across the Procurement organization SRM target will contribute to foster Procurement Performance through • Better efficiency in supplier management processes • Strong risk mitigation processes and tools • Reinforced procurement management capabilities 10
SRM would better stands for Supplier Risk Management Customer example � Logistic � Sub tier chain control � Quality � Safety classification � Financial � Special Process Involvement � Environment and Safety � Environment and Safety � Design Complexity � Design Complexity � Human Resources � Manufacturing Complexity � Geographical, Political, Ethic � Organization / Structure � Manufacturing Capability � Legal (IP)
Going one step forward with Supplier Asset Management • A consistent Suppliers database is an asset for the enterprise as part of the immaterial assets (so called goodwill) • Extra financial ratio are commonly used now to evaluate companies on criteria such as : companies on criteria such as : – Sustainable Development level of maturity – with a high focus on suppliers – Immaterial assets extended to customers base & suppliers long term relationships – See : http://www.observatoire-immateriel.com/ 12
SRM & ROI : the big issue • Master data management : enhance the quality of data : identify current workload and impact of an improved process with a better productivity • Risk management : potentially high financial losses (supplier dependancy, reputation of the company,…) versus which gains ? dependancy, reputation of the company,…) versus which gains ? • Knowledge management : supplier button = quick access to a reliable information with facts and figures on a past period : which gains ? • Goodwill impact : potentially high value ? 13
New business models have to be considered • What is the value of a supplier network for a software vendor acting as a service provider ? • Who pays for what services ? Dematerialization ? – PO sending – PO acknowledgment – E-invoicing – Suppliers discovery – Documents management (legal, regulation, quality certificates…) • What is the right attitude on buyers side ? • What is the impact on ROI calculation mode ? 14
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