Supplier Relationship Management (SRM) is a critical enabler of SEI, positioning organisations within relationships that have clearly understood rules of engagement. Formalizing interaction builds understanding and trust, which goes on to deliver the insight and an environment where innovation can be generated and freely traded within the frameworks of agreed interaction.
A key process in any SRM process is segmentation, but for SEI this must go much further – assessing the capabilities of suppliers as much as their performance; and looking well beyond the current supplier ecosystem for new opportunities and expertise.
The SRM module of the methodology is designed to help companies to draw on the best practice they might currently have in place, while bringing new approaches and processes to facilitate greater collaboration with the supply ecosystem.
Some of the core processes in SRM, including performance management, segmentation and supplier development must be supplemented with additional capabilities, tools and processes.
Level 1: Opportunistic Innovation
All suppliers are encouraged to present SEI proposals. The management of these proposals are dealt with by procurement using a single standardized process.
Level 2: Systemic Innovation
Suppliers are segmented using a standard model and the business functions aligned around the most appropriate relationship management approach for each supplier.
Level 3: Interactive Innovation
Suppliers are positioned from the perspective of core capabilities and value proposition in order to develop productive working arrangements that reflect mutual benefit.
Level 4: Embedded Innovation
Relationships are built between network partners that reflect their relative strength and value to the whole network, rather than between individual customers and suppliers.
SRM is a crucial element of SEI, and, to some, it may make sense to build an SEI program on top of existing SRM approaches. Some organizations have done just that, but where others have separated them some of the tools and capabilities used for SRM are still relevant and still used for the purposes of SEI.