Suppliers Relationship

Management
Suppliers Relationship Management –
A Business Definition
• Strategic Sourcing - Analyze spend &
negotiate terms and conditions with selected
suppliers
• Operational Procurement – Order, receive
& pay for purchases, track expenses and
ensure compliance
• Supplier Enablement – Enable your supply
base to work with you to deliver goods and
services on time
• Content Management – Harmonize all
content and master data related to sourcing &
procurement
 A Shift in Perspective
• Move towards strategic Outlook that puts
less emphasis on Short term Cost Cutting
measures
• Emphasis on Long term collaborative
Relationships
• Better performance from Suppliers on
Quality & On time delivery
• Have a Win-Win relationship with
suppliers
 How to Achieve the Shift
• Continuously measure Suppliers
performance for Quality & On-time
delivery
• Identify and reward Suppliers that
add the most business value
• Refocus the energies of Purchasing
Professionals on high value adding
activities
 How to Achieve the Shift
• Improve Suppliers selection process
• Improve contract negotiation
process
• Support central
management/monitoring while
maintaining the advantages of local
execution
• Involve Suppliers at the early stage
of product development
 How to Achieve the Shift
• Analyze global spend by supplier,
category and volume
• Make better use of Corporate
aggregation and purchasing
volumes
• Improve transaction efficiency and
payment process
 STRATEGIC MANAGEMENT GROUP

FPL gets into long term partnerships with the suppliers of strategically important product / service

FPL’s SUPPLIER PERSPECTIVE

High

Preferred Strategic
Strategic Importance
of Product/Service

Suppliers Partnerships

Commodity Strategic
Suppliers Suppliers

Low Supplier Concentration High

38
 Strategic Sourcing
• Least cost option, L1 approach
Vs
• Long term issues such as Quality,
Risk & Innovation
• Analyzing global spend
• Evaluating historical buying patterns
 Strategic Sourcing
• Consolidating & anticipating Supply
needs
• Tracking current market trends
• Evaluate the capacity of suppliers
around the world
• Deliver high quality goods that match
specific corporate needs
Means to execute Strategic Sourcing
• Collaboration Tools to help working
of internal teams
• Leveraging Organizational
Knowledge
• Streamlining communication-
intensive processes like RFQ &
Reverse Auction
• Facilitate Negotiation processes
• Develop and manage contracts
Means to execute Strategic Sourcing

• Continuous Supplier Evaluation

process
– to provide information company needs
to negotiate contract terms from
position of power
• Choose the supplier that add most
business value
 Operational Procurement
• Ensure On time Delivery
• Simplify day-to-day activities
– Obtain planned goods
– Contract services
– Make adhoc purchase
• Unimpeded access to information required
for each transactions
• Work flow, approvals & progress status
 Supplier Enablement
• Incorporating supplier base into internal
purchase processes
• Use of Portal technology for EDI with no
or very little investment in technology
• Suppliers mange
– Incoming orders
– Send advance shipping notices
– Issue Invoices
– Maintain Catalogue content
 Supplier Enablement
• Buyer suppliers collaboration for
– Product development and design
– Inventory management, Just-in-time
supplies
– Efficient and simplified payment
process
• Ability to adjust plans on fly – agility
to change quickly
 Content Management
• Same schemas and meta data for
identifying products & materials in
consistent manner
• Correlating master data from various
systems and linking to a single master key
• Avoid problems associated with data
redundancies & inconsistencies
• Ultimately avoid Cost of Poor Quality
• Informed sourcing & purchasing decisions
 Extended SRM
• SRM is more than Technology, it is a
philosophy, a shift in perspective built on
mutual trust
• It encompasses all supplier collaboration
including design & inventory mngt.
• Bid invitation to pre-qualified suppliers
thorough e-mail with a link to specifications &
other project requirement
• Bids are submitted electronically, facilitating
evaluation by both purchasers & engineers
 Extended SRM
• Avoids supply errors which pop up
much later during the project(COPQ)
• Brings down product cost and cycle
time, ensures on time delivery
• Bid evaluation electronically
• Publish quoted prices without names
• Request for revised bids, Reverse
auction to get best negotiated price
mySAP SRM Solution Map
APPLICATIONS
Strategic Sourcing Supplier RFQ & Contract
Sourcing Analytics Evaluation Auctions Mngmnt.
Operational Self-service Plan driven Service
Procurement Procurement Procurement Procurement
Supplier Supplier Portal Supplier Connectivity
Enablement
Content Content Consolidation Catalogue Content
Management Management
TECHNOLOGY
People Portal Multi Channel Collaboration
Integration Access
Information Knowledge Business Master Data
Integration Management Intelligence Management
Process Integration Broker Business Process
Integration Management
 Major Users of SRM
• Tata Motors
• ONGC
• Tata Steel
• Mahindra & Mahindra
• Chatisgarh State Electricity Board