Supplier relationship management encompasses all activities concerning the management of the relationship with suppliers such as legal, performance, finance, risk and change, improvements as well as the strategic fit to your organisation.
The evolving business imperatives of ESG, cost efficiency and high measurable performance demands new supplier relationship strategies, particularly for previously overlooked or ignored topics. It is essential to start treating your business-critical suppliers as strategic suppliers. In addition, regulators across the globe, especially in the EU and Denmark, are increasing the standards for supplier risk due diligence processes and documentation and demand accurate reporting from organisations to demonstrate their compliance.
From the onboarding of new suppliers and monitoring their performance to the development of strategic partnerships, supplier management has become a critical capability for procurement professionals, who have to step-up and act as key stakeholders in preventing supply chain disruptions and promoting more close-knit collaboration towards the organisation’s suppliers.
Do you recognise these challenges?
Many organisations are experiencing disruptions in the reliable supply of products and services due to the combination of various global and local factors. Everyone is trying to identify and act on these risks and define or strengthen their approaches to managing suppliers to ensure business continuity. But where do you start? How do you, as a procurement professional, raise the bar and grow your procurement function to the next level, asserting yourself as a leading top-tier procurement organisation?
Some of the typical challenges we have faced together with our clients are:
- Cumbersome and manual processes to collect reliable supplier data and insights.
- Lack of complete, real-time and validated data to drive more effective decision-making.
- Lack of business-defined KPIs, metrics, weightings and thresholds to provide truthful ratings of the supplier relationships.
- Strong 'silo culture' in the organisation, leading to decreased cross-collaboration and overlapping work between the different departments.
- Only reacting to disruptions after they have occurred, rather than anticipating them beforehand and trying to proactively mitigate the risks.
- No clear mandate for the procurement function and its level of decision-making power.
- Lack of agreed-upon delivery model for the procurement function, i.e. should the procurement function be a centralised function or scattered across local offices?
- Cumbersome IT systems that feel more like a daily burden, rather than a solution that will lead to increased efficiency and control.
- Unclear governance roles, ownership and control metrics, i.e. who describes the requirements, creates supplier evaluation criteria, participates in the supplier evaluation, conducts contract management or facilitates change requests?
Only looking at supplier relationship management retrospectively will often lead to it being characterised as 'fire extinguishing'. The COVID-19 pandemic brought massive disruptions to the supply chains worldwide, heightening the risk of suppliers not being able to deliver according to the contract and/or expectations. The pandemic did not distinguish between specific industries in this globalised, ever-changing business environment. Robust supplier relationship management programmes that are proactively able to identify risks and are powered by technological innovation and data are not only the way forward, but a competitive advantage when done effectively.
Our leading practice
Based on hundreds of implementations worldwide, we have developed leading practice methods, technology and tools to fast-track organisations on their supplier relationship management transformation journey. Our procurement professionals can help you establish an effective supplier risk management operating model and organisation that delivers tangible value to your business. Below you can read more about the different ways in which we do this.
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Strategic insights, direction and collaboration We provide strategic insights, direction and collaborate with you to develop different paths for maturing your procurement function’s target operating model and ways of working. |
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Assessment of current supplier relationship management We assess your current supplier relationship management capabilities and prove direct, concrete and valuable recommendations and initiatives for you to begin your journey. |
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Gap assessments We provide leading practice gap assessments around all aspects of supplier relationship management, including contract reviews, metric definitions, governance models, roles and responsibilities, process mapping and improvements, technological support, data and reporting insights, etc. |
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Support and training of your organisation We support and train your organisation in developing and maturing its supplier relationship management capabilities, tailormade to your specific demands and requirements. |
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Future roadmaps and business cases We develop future roadmaps and business cases, including tangible role-based work packages and implementation planning. |
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Supplier relationship management as a managed service We perform supplier relationship management as a managed service for your organisation, supporting and assisting your procurement department in every aspect. |
