Supplier Relationship Management
Created by:
J. Russell Haynie
Brigham Young University
AGENDA
-Definitions
-Building Solid Relationships
-SRM Systems
-SRM System Capabilities
-Brainstorming
-Toyota/Honda Example
-The Bottom Line
-Works Cited
Definition
-“A comprehensive approach to managing an enterprise's
interactions with the organizations that supply the goods and
services it uses.”
-SAP
The Power of Trust
-Company Strength
“Trust is stronger than fear. Partners that trust each
other generate greater profits, serve customers better, and are
more adaptable” - Nirmalya Kumar
- Proctor and Gamble Example
SRM Systems
-Spend Analytics
- Are we using cash wisely with our suppliers?
-Sourcing Execution
-Are we using the correct suppliers based on our needs?
-Procurement Execution
-Are we getting the right materials from our suppliers?
SRM Systems
-Payment
-Is the current payment method conducive to our needs?
-Supplier Scorecarding
-How do our suppliers match up when compared to
important attributes?
-Performance Monitoring
-According to our expectations, how well are our suppliers
meeting those expectations?
SRM System Capabilities:
Allowing a company to grade suppliers through
computerized date to:
-Create spend transparency
-Develop detailed profile of supplier base
-See more opportunities for sourcing materials and services
-Prioritize suppliers on company's’ desired attributes
-Ensure the quality of purchased items
-Ensure appropriate levels of supply
Brainstorming Exercise
Game Theory Exercise
-How would you use SRMS from
the company’s and supplier’s
point of view.
Company
Trust
-Are there benefits to acting nontrusting?
Supplier
-What are the benefits to having
trust?
Not Trusting
8 , 8
10 , 1
Not Trusting
Trust
1 , 10
1 , 1
Toyota and Honda
-Survey of Principle Measures of Manufacturer-Supplier
relations in the U.S. Auto industry
-Toyota/Honda ranked 1st and 2nd as most preferred companies
to work with because:
-Better Communicators
-More Trustworthy
-More Concerned with supplier’s profitability
-US companies avg. of 2-3 years for new car design while
Toyota/Honda had avg. of 12-18 months.
-Promoted Innovation
Toyota and Honda
- Both Toyota and Honda have used the same
American suppliers as Ford, GM and Chrysler.
- What did they do different?
Toyota and Honda
-Understand your suppliers competency.
-Learn about supplier’s business
-Supervise suppliers
-Provide constant feedback.
-Develop supplier’s capabilities
-Help supplier innovate and problem solve
-Share relative information
-Insist on accurate data
-Use meetings to problem solving and learning
-Improve supplier practices
-Exchange best practices with suppliers
Quotes
“Honda is a demanding customer, but it is loyal to us. American
automakers have us work on drawings, ask other suppliers to bid on
them, and give the job to the lowest bidder. Honda never does that.”
– CEO, Industrial fasteners supplier to Ford, GM, Chrysler, and Honda, April 2002
“In my opinion, Ford seems to send its people to “hate school” so that
they learn how to hate suppliers. The company is extremely
confrontational. After dealing with Ford, I decided no to buy its cars.”
- Senior Executive, Supplier to Ford, October 2002
Quotes Continued
“Toyota helped is dramatically improve our production system. We
started by making one component, and as we improved, Toyota
rewarded us with more orders for more components. Toyota is our best
customer.”
- Senior Executive, Supplier to Ford, GM, Chrysler, and Toyota, July 2001
The Bottom Line
Strategic Supplier Relationship Management adds
value to your company by bettering your interaction
with suppliers. Trust and information flow are key to
the successful relationship.
Works Cited
- Enright, J. Michael (2003). Buy-Supplier Relationships. Centre for Asian Business
Cases, The University of Hong Kong.
-Foster, S. Thomas. (2010). Managing Quality Integrating The Supply Chain 4th Ed.
Upper Saddle River, NJ: Prentice Hall.
-Kumar, Nirmalya (1996). The Power of Trust in Manufacturer- Retailer Relationships.
Harvard Business Review.
-Liker, Jeffrey K. and Thomas Y. Choy (2004). Building Deep Supplier Relationships.
Harvard Business Review.
-http://searchsap.techtarget.com/sDefinition/0,,sid21_gci871756,00.html