SRM strategies: how to deal with industrial suppliers?

It is not an easy task to draw an exhaustive picture of the industrial sector, given the number of actors and forces in play. Organizations’ activities are most often guided by long and complex processes involving high value-added products. Since the 2000s, the profession of “purchaser” has gained in prestige. They are now the ones who allow the company to maintain its margins, establish strategic partnerships with suppliers and improve its brand image. From then on, Purchasing was slowly replaced by SRM. But what is SRM?

A single slip-up and the entire value chain is affected. Buyers, engineers, technicians or suppliers: it is essential that each and every element of this chain work in unison.

While new solutions facilitate cooperation within the company, relationships with external actors - and particularly with suppliers - are not always viewed as strategic.

Nevertheless, they have a direct impact on your brand image. Any breach of an industrial supply contract is likely to stop or slow down the production rate, and therefore to lead to customer dissatisfaction. In this regard, the industrial sector should not waver in investing in a coherent SRM strategy.

From Purchasing to SRM: a strategic shift

Well known among maintenance teams, the Purchasing function is one of the key players of the supply chain. By handling the reception and coordination of production and non-production purchasing operations, it is a real hub between the company's various departments.

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SRM (Supplier Relationship Management) provides a comprehensive approach to managing the interactions between a company and its suppliers of industrial goods and services. It aims at rationalizing and optimizing relations between the various stakeholders. In other words, SRM gives the opportunity to improve the processes of purchasing industrial equipment and consumables, inventory management and materials processing.

Long considered an operational function, SRM has gradually unveiled its strategic role. Nowadays, Supplier Relationship Management (like industrial maintenance) guarantees the company's productivity, while offering a real competitive advantage.

How to build a stronger SRM strategy?

Although it differs from one firm to another, it is essential that your SRM strategy aligns with your organization's vision and that it is integrated with your overall strategy. To do this, we suggest you follow these four steps to developing the strategy that best suits your needs.

Define your needs

The first step is to carry out a detailed analysis of the exact rate and state of your production chain, in order to precisely define your procurement needs. The Mobility Work maintenance management platform allows you to collect data on the real-time status of your equipment by connecting your intelligent sensors to your new generation CMMS (computerized maintenance management system).

Find the ideal supplier

Supply segmentation: search and classify suppliers according to the risks and potential benefits for your company, in order to identify the ideal partner. This step is often laborious and time-consuming for SRM teams, which has to compare the many offers on the market. Mobility Work next-gen CMMS facilitates your research by making available to our users the official products catalog of our partner suppliers and manufacturers.

 

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Access to our partner’s official catalogs from the “Reports” tab of your Mobility Work CMMS

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Through the “Companies” tab of the Mobility Work software, each organization can share with the CMMS’ user community its own official service providers and suppliers.

Conduct a detailed analysis of the competition. Select a number of suppliers who may play a strategic role in the development of your company. Depending on your sector of activities and the needs identified, you will have to rank these suppliers in order of importance. Some suppliers will be considered "strategic" and will have a major impact on your profitability and brand image, others will be considered "secondary". However, be careful not to overlook the importance of these ones; your SRM strategy should be applicable to every supplier profiles.

Write down your strategy

Too many organizations still develop their strategy separately. And yet several aspects of your company’s strategy, such as international development, R&D and innovation or your cost reduction policy, are shaping your purchasing and supplier management strategy.

Don't hesitate to involve your suppliers in the definition of your SRM strategy. You will thus be able to align your expectations with the capabilities of your partners and avoid any inconveniences (delay in delivery, stock shortage, lack of customer service...) that would impact your chain of value. If your suppliers understand your expectations precisely, they will be able to accompany you and help you make the best decision for you and your organization.

Build your network

Don't neglect your suppliers! By establishing long-term privileged relationships with your partners, you will benefit from their good practices in terms of maintenance and quality, or provide them with your ffeedback

In the long term, you will be able to benefit from an ROI on your procurement expenses, reduce supplier risk, optimize your processes and even take part in the continuous improvement of their products.

What does the future hold for SRM?

Like the industrial sector, the industrial supply market has undergone rapid transformations driven by the multiplication of its players, the advent of Industry 4.0 and smart solutions, as well as the constant quest for productivity and flexibility. What are the consequences of these new dynamics for SRM?

The industry’s ongoing transformation

The French industrial landscape has been undergoing profound changes for several years. The rise of new technologies and supply chain 4.0 has led its players to redefine the supply chain and its mechanics. Thanks to the integration of IoT tools, information is exchanged much more quickly, operational and strategic functions are in constant contact.

As part of a predictive maintenance strategy, for example, purchasing operations are now aligned with the actual needs of the production teams and no longer with a predefined schedule. Thanks to Mobility Work CMMS, maintenance operators communicate their needs in spare parts directly to the Purchasing teams. This next-gen CMMS allows maintenance technicians to record the entry and removal of spare parts as they go along, and therefore to improve the management of inventories.

 

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Mobility Work next-gen CMMS is provided with an intuitive, easy-to-use tool for spare parts management

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Driven by the rise of new information and communication systems, consumers are more and more often turning to personalized products. Industrial suppliers must, therefore, rethink their distribution model in order to maintain their customer base.

The evolution of buyers' expectations

In 2015, a UPS study revealed that buyers were progressively moving away from traditional distribution channels and directly turning to manufacturers. Direct purchases from manufacturers or on e-commerce sites are gradually replacing traditional buyers-distributors relationships. A new type of buyer-supplier relationships is emerging in the industry. Suppliers are no longer only third parties but are becoming real partners. SRM strategies participate in the development of supply cycles and supply chain optimization.

Read the full UPS study

However, with today’s customer-centric approach, industrial manufacturers and suppliers can no longer just reduce their profit margins in order to maintain their competitive advantage. As they wish to cut down their production costs without compromising their average productivity, organizations seek to minimize supply risks. Many criteria influence manufacturers in the choice of their supplier:

  • Reactivity. An increasing number of buyers are turning to suppliers offering delivery times of 24 to 48 hours. This allows them to respond quickly to their maintenance needs and thus minimize production downtime.
  • Tailored service. Plants that have deployed a predictive maintenance strategy seek to align their purchasing rate with the needs of the production chain, and will, therefore, favor flexible suppliers.
  • Customer support. With SRM now being seen as a true partnership, buyers are increasingly looking for quality customer care: product support, good practices for equipment maintenance, advice on possible applications for their consumables, etc.

Which tools to manage your suppliers?

The growing importance of SRM goes hand in hand with the development of new ways to simply manage interactions with your suppliers. In this regard, traditional SRM software is allowing Purchasing function to send and process calls for tenders, orders, legal documents, as well as continuous data collection...

Combined with PLM (Product Lifecycle Management) solutions, SRM tools enable companies to channel and improve communication with their suppliers, implement and share best practices, in order to optimize the procurement process.

While developing our solution, the Mobility Work team aimed to create a modern tool and to offer companies the means to accelerate their digital transformation thanks to a mobile platform in SaaS mode, hosted on the Cloud. Mobility Work next-gen CMMS offers its users the ability to access the Official Products catalog of our partner manufacturers from their computer, tablet or smartphone.

With just a few clicks, maintenance teams can copy the product sheet of their choice to their equipment, and thus benefit from official information and documentation, or contact the manufacturer. Delays, productivity, quality: in the long term, organizations will have modern means to manage supplier risks. Test Mobility Work today and benefit from an intuitive and versatile application to manage your supplier relationships with ease.