John Burson 
edited Friday, February 23, 2024

Apart from usual information like contacts, location, and contract agreement, how much do you know about your suppliers? Answering this question will pinpoint to critical parameters of your business that when enhanced, will greatly improve the success of your b2b marketing strategy.

Let’s have a look at five critical aspects of supplier relationship management (SRM):

Knowing Each Other

You have completed the sourcing process, the contract is signed, and the supplier is on the way to deliver the required products or services. The next process is to manage the newly formed relationship. It’s not simply about monitoring transactions and analyzing quarterly reviews, but about relationship building.

Begin to learn about your suppliers’ products and services, current goals and plans for the next five years, financial situations, new business ventures, innovations, and so on. Are they operating in compliance with the relevant laws and regulations?

What are Your Supplier’s Tools of the Trade?

It’s important to segment your suppliers for your supplier relationship management structure to be effective. Using their tools of trade, you can group them in terms of commodity, strategy, critical risks, and transactions.

Check on the supplier scorecard and performance to get a picture of their ability over time. You need to set a performance criterion threshold that your suppliers must meet. This may range from delivery, innovation, to savings.

Technology is another critical aspect to consider. A good supplier relationship management system handles segmentation, compliance, scorecards, and keeps the information within one lean platform.

Proper Governance & Regulatory Compliance

Governance structures are understood better when you focus on business processes and the sequence of decision-making hierarchy. Look at risks to lay out your governance structure. Warning bells should click when a supplier who has performed dismally for some weeks demands prompt payments. You can make a proactive approach by sending a team to sit with the top management of the company and discuss what affects the supplier’s financial stability.

What’s your Desired Value?

After enacting enabling governance and compliance protocols, it’s time to move into procurement by analyzing the mutual benefits you’ll draw from the relationship. What value do you desire from the suppliers, and what do they desire from you?

The value may come in different forms, but most businesses determine value from cost savings, increased revenues, and cost control mechanisms. This can further be split into various components that bring value including cost reduction, product innovation, increased revenues, total Cost reductions, and much more.

Performance Measurement 

The final aspect is to measure how your suppliers are performing. It’s a good idea to start from the scorecard and look further into innovation and how close the supplier is willing to collaborate with your business. Look at cost sharing, quality assurance, supply assurance, and complexity reduction.


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