SCRM Enhances Supplier Relationship Management

Supplier relationship management is by no means a new concept in the procurement world. Neither is consideration of risk as part of supplier relationship management—but the demands of risk in SRM have grown and changed. Traditionally, procurement professionals have focused primarily on financial health to mitigate risk. As globalization and supply market volatility increase, however, the requirements behind what makes a good supplier relationship management strategy are shifting.

Here’s the bottom line: If you’re not enhancing your SRM program with risk management capabilities, then you’re leaving your organization more exposed to risk than ever. The traditional ways of managing your suppliers aren’t enough. You need to consider more types of risk, more sources of information and more risk from your sub-tiers. It’s time to move your SRM to the next level by establishing an supply chain risk management strategy.

• Supply networks are vulnerable to many and various types of risk that go far beyond purely financial risks. Over 48% of the CPOs surveyed by Deloitte stated that supplier resilience and supply continuity are among the biggest risks to their organizations. (Source: Deloitte Global CPO Survey, 2021) Supplier relationship management should address all types of risks and an integrated SCRM solution builds a solid foundation for this.
• 44% of companies report that they do not have technology in place to monitor supply chain disruptions across the enterprise. (Source: Business Continuity Institute, Supply Chain Resilience Report 2021) An SCRM solution helps you proactively monitor for risks and improve your supplier relationship management. 
• Companies are increasingly being hit by supply chain disruptions. In 2019, 4.8% of companies experienced more than 10 interruptions. By 2020, that number had already risen to 27.8%, more than one in four businesses. (Source: Business Continuity Institute, Supply Chain Resilience Report 2021). Risk events can strike any member of your supply network and need to be monitored holistically as part of your supplier relationship management.

• Build consensus with key stakeholders that a robust supplier relationship management program must address supply chain risk.
• Enhance segmentation, awarding and performance measurement by including risk metrics.
• Understand that to fully and effectively manage your suppliers, you need something more than a spreadsheet. An SCRM solution can help.