Designing and Implementing a Supplier Relationship Management Program
After reaching a point of diminishing returns from strategic sourcing efforts, a Fortune 500 consumer products company undertook a major initiative to analyze its supply chain to identify opportunities to drive additional savings, as well as quality improvements, innovation, and top-line growth. The assessment showed significant gaps in the management of interactions with suppliers post contract award, and a need to significantly increase the breadth and depth of collaboration with key suppliers.
To close these gaps, a transformational project was undertaken in three phases: blueprinting and building a supplier relationship management (SRM) program, piloting new SRM processes and tools, and ensuring acceptance and implementation of SRM throughout the company.
Vantage Partners conducted interviews, focus groups, and town-hall style meetings with with a wide-range of stakeholders (from functions including R&D, product management, marketing, and supply chain) to gather input and gain their support for SRM. With that input, a cross-functional task force, later transformed into a permanent SRM Office, was chartered to design new policies, processes, tools, and job aides for working more collaboratively with suppliers and systematically managing relationships with them.
Several critical supplier s were selected for pilots to, validate and refine new approaches, and to support change effort by delivering “quick-wins” through enhanced supplier collaboration. Vantage provided coaching and support to the SRM Office and supplier management teams throughout the pilots, with the aim of developing self- sufficient capabilities within the company.
Building on early success from the pilots, Vantage worked with the SRM Office to implement a change management plan including training, coaching, and communication efforts designed to embed SRM practices and skills across the company. An SRM Community of Practice was also launched to enable ongoing learning and sharing related to SRM across business units, functions, and geographic regions.
As a result of this effort, the client recorded measurable results immediately, including:
- Year One cost savings exceeding $10M USD (from pilot efforts)
- Annual measurable financial benefits of tens of millions of dollars, within three years of implementing the program
- Approval of multiple patents, and multiple new products brought to market, through joint innovation and product development efforts with suppliers
- Successful cost reduction and revenue enhancement projects with suppliers in multiple categories
- Reduction in cost and risk of entering new markets
- Streamlined supply negotiations