SRM strategy: supplier relationships in the industry

Surely you know the Purchasing function, but have you ever heard of SRM? Difficult to draw up an exhaustive picture of the industrial sector as its actors and mechanisms are multiple. Organizations are most often governed by long and complex processes, involving products with high added value. One misstep, and the entire value chain is affected. Buyers, engineers, technicians or suppliers: it is essential that all the links in this chain work in unison.

While new solutions facilitate cooperation within the company, relationships with external actors — and especially with suppliers — are not always considered strategic. However, these have a direct impact on your brand image. Any breach of an industrial supply contract is likely to cause a halt or a slowdown in production, and therefore to dissatisfaction among end customers. In this, The industrial sector should not hesitate to invest in a coherent SRM strategy.

From procurement to SRM: a strategic evolution

Well known to maintenance teams, The Purchasing function is a key player in the supply chain (supply chain). A real hub between the company's various departments, it is responsible for receiving and coordinating production and non-production purchasing operations.

Starting in the 2000s, the profession of buyer gained in prestige. It is now the one that allows the company to save its margins, to establish strategic partnerships with suppliers and to maintain its brand image. From then on, Purchasing is giving way to SRM. But What is SRM ?

The SRM (Supplier Relationship Management, or supplier relationship management in French) offers a global approach to managing interactions between a company and its suppliers of goods and services. Its objective is to streamline and optimize relationships between the various stakeholders. In other words, SRM contributes to the improvement of processes for the acquisition of industrial equipment and consumables, inventory management and material processing.

Long considered to be an operational function, SRM has gradually revealed its strategic role. The management of supplier relationships (in the same way as industrial maintenance) is now a guarantee of company productivity, while presenting a real competitive advantage.

Develop an SRM strategy in 4 steps

Although it varies from one entity to another, it is essential that your SRM strategy is aligned with the overall vision of your organization and therefore integrated into your overall strategy. For this, we offer you four steps to develop the SRM strategy that best fits your needs.

Define your needs

The first step is to carefully analyze the pace and exact condition of your production chain in order to precisely define your supply needs. The Mobility Work maintenance management platform allows you to collect data on the real-time status of your equipment by connecting your smart sensors to your new generation CMMS (computer-aided maintenance management).

Find the ideal supplier

Then proceed with a segmentation of the offer: research and prioritize suppliers based on the risks and potential gains for your business, in order to identify the ideal partner. This research stage is often a painstaking and time-consuming task for SRM teams, who have to compare the numerous offers on the market. The new generation CMMS Mobility Work facilitates your research by making available to its users the catalog of official products from its suppliers and partner manufacturers.

Access the official catalogs of our partners from the “Reports” tab of your Mobility Work CMMS

Via the “Company” tab of the Mobility Work application, each company is free to share its own service providers and official manufacturers with the CMMS user community.

Conduct a thorough analysis of the competition. You will be in a position to retain several suppliers who may be of strategic interest in the development of your business. Depending on your sector of activity 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; your SRM strategy should be applicable to each vendor profile.

Define your strategy

Too many organizations still approach their SRM strategy in isolation. However, other business strategies, such as international development, R&D and innovation or your cost reduction policy, shape your purchasing and supplier management strategy.

Don't be afraid ofintegrate your suppliers into the development of your SRM strategy. You will thus be able to align your expectations with the capacities of your partners and save yourself from possible inconveniences (late delivery, shortage of stocks, lack of follow-up, etc.) that would affect your value chain. If they precisely understand your expectations, your supplier will be able to provide you with the most accurate support and help you make the best decision, for you and your organization.

Build your network

Do not abandon your suppliers! By establishing special long-term relationships with your partners, you will benefit from their best practices in terms of maintenance and quality, or give them your feedback.

In the long term, you will be in a position to amortize your procurement costs, reduce supplier risk, optimize your processes, and even participate in the continuous improvement of their products.

What is the future for SRM?

Like the industrial sector, the industrial supply market has undergone rapid transformations driven by the multiplication of its players, by the advent of industry 4.0 and connected solutions, and by the constant quest for productivity and flexibility. What consequences do these new dynamics have on SRM?

An industrial environment in full metamorphosis

The French industrial landscape has undergone profound changes for several years. The rise of new technologies and supply chain 4.0 have led its actors to redefine the supply chain and its mechanics. Thanks to the integration of connected 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 actions are now aligned with the real needs of the production chain and no longer with a predefined schedule. Equipped with their Mobility Work CMMS, maintenance operators transmit their needs for spare parts directly to the Purchasing teams. The new generation CMMS allows maintenance technicians to record the entries and exits of spare parts gradually, and therefore to perfect the management of your inventories.

Mobility Work's next-generation CMMS has an intuitive and easy-to-use spare parts management tool.

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

Changing expectations of buyers

In 2015, a UPS study revealed that businesses tend to move away from traditional distribution channels and go directly to manufacturers. Direct purchases from manufacturers or on e-commerce sites are gradually replacing traditional purchaser/distributor relationships.. A new typology of the purchaser-supplier relationship is emerging in the industry. Suppliers are no longer considered only as third parties, but as full partners. SRM strategies are part of the development of supply cycles and the optimization of the supply chain.

Read the full UPS study

However, at the time of customer-centric (focused on the needs and expectations of customers), industrial manufacturers and suppliers can no longer content themselves with reducing their margins in order to maintain their competitive advantage. Wishing to reduce their production costs without reducing their average productivity, organizations seek to minimize procurement risks. Many criteria influence manufacturers in choosing their supplier:

• Responsiveness. More and more buyers are turning to suppliers offering delivery times between 24 and 48 hours. This allows them to respond quickly to their maintenance needs and thus minimize production stoppages.
• Custom purchase. Companies that have chosen predictive maintenance seek to align the pace of their purchases with the needs of the production chain, and will therefore favor flexibility at their supplier.
• The follow-up. Just as SRM is now seen as a real partnership, buyers are increasingly looking for quality customer support: after-sales service, best practices for equipment maintenance, advice on the possible applications of their consumables, etc.

What 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 suppliers. To do this, the Purchasing functions already have SRM software for sending and processing tenders, orders, legal documents, but also the continuous collection of data...

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

In developing its solution, the Mobility Work team had the ambition to create a tool in keeping with the times and to offer companies the means to accelerate their digital transformation thanks to a mobile platform, hosted on the Cloud in SaaS mode. Mobility Work's new generation CMMS offers its users the possibility of accessing from their computer, tablet or smartphone the catalog of Official Products from our partner manufacturers.

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. Deadlines, productivity, quality: in the long run, organizations have modern means to control supplier risks.

Try Mobility Work today and benefit from an intuitive and versatile application to easily manage your supplier relationships.