Managing relationships with suppliers (SRM)

Managing supplier relationships

The term “management of supplier relationships” (SRM, Supplier Relationship Management) refers to the use of technologies by an enterprise to improve delivery mechanisms of its suppliers.As with managing employee relations , this concept is based on the vendor relationship management.

The purpose of the SRM is to allow the company to improve communication with its various suppliers, share with them a methodology, business terms and information and enhance familiarity between them in order to optimize the delivery process. In turn, the SRM is also intended to familiarize providers with the core business of the company and its various products to ensure supplies custom process.

SRM processes

SRM solution editors generally define a process comprising four large stages:

  • Cooperative design : is the integration of supply problems from the time the product by involving suppliers via a cooperative design tool while ensuring minimum costs at all levels is designed.
  • Identification of suppliers (also supply ): it aims to identify and qualify potential suppliers according to their costs, production capacity, delivery and quality assurance. At the end of this stage, the best suppliers are invited to tender.
  • Vendor Selection : Performed by a reverse auction mechanism (in English reverse auctions ) where the functions of buyer and seller are reversed. The SRM tools have, generally offers an interface that allows three types of applications (commonly called “Request for x” and writtenSDx “):
    • SDC ( Request , English Request For Quotation ), ie, a simple request for price quote regarding relatively common products. The supplier submitting the lowest price is almost always selected.
    • RFP ( Request for Proposal , English Request For Proposal ), ie a request for suppliers tosubmit a commercial proposal specifying not only price but also information about the company, its solvency, production capacity, inventories and delivery times , etc. It chooses the supplier in accordance with a selection system that allows evaluating the proposals according to different criteria.
    • SDI ( request , English Request For Information ) is issuing a simple request for information about products and services offered by providers; It does not necessarily imply that no offer is made.
  • Negotiation : its purpose is to formalize the contract between the company and the supplier that has been selected. It is likely that clauses related to logistics, payment terms, quality of service or any other particular obligation to be included.


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