Supplier Relationship Management (SRM) is a systematic, enterprise-wide approach of evaluating the performance of suppliers and managing relationships with them. It involves creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value and reduce the risk of failure.
In the business world, SRM is used to establish a two-way, mutually beneficial relationship with suppliers. The aim is to effectively manage and control interactions with these entities that provide goods or services to the organization. SRM can be used in different industries, including manufacturing, retail, healthcare, and technology.
The main goal of SRM is to streamline and improve processes between a buyer and its suppliers. It's not just about squeezing the lowest possible price out of suppliers, but about extracting the best possible value.
SRM can help a company reduce costs, mitigate risks, innovate, and achieve sustainable, mutually beneficial relationships with its suppliers.
There are numerous software solutions available that can help companies implement SRM practices effectively. Examples include SAP SRM, Oracle SRM, and Epicor SRM.
SRM can provide numerous benefits, including improved negotiation capabilities, better risk management, access to supplier innovation, cost reductions, and improved supplier performance.
In conclusion, SRM is a key component in effective supply chain management. It can help businesses create more value, build stronger relationships with suppliers, and reduce risks.