As CIPS describes it, “Supplier Relationship Management (SRM) is a comprehensive approach to procurement, managing and capturing the post-contract value from key business relationships” (CIPS).
As we know; SRM is best used to leverage the competencies of suppliers, and build shared value relationships between buyer and supplier organizations.
CapGemini reported just 5 years ago in their Chief Procurement Officer survey that 97% of responding CPOs found Supplier Relationship Management to be a key priority in their procurement strategy.
According to the same survey it was determined that CPOs look towards SRM to create collaborative innovation, reduce the total cost of ownership and increase holistic supplier-related risk management.
It’s become apparent during the last few years that SRM has a huge potential to make a significant impact in global supply chains.
Now that we know what SRM is, it leads us into ‘Why is it important’
SRM is a procurement discipline and technology area that is constantly evolving as many of you have likely noticed.
As Supply Chain complexity continues to grow, so does the complexity of supplier relationship management.
Luckily, The application of SRM software can make things a little bit easier
While SRM software can make great impact in your organization, it’s really just providing a means of a vehicle.
SRM software provides a means to transform the way that buyers & suppliers work together.
SRM software enhances the opportunities for sustainable trade and shared value creation.
SRM ultimately is a work tool to create winners on both sides of the trading table, and make buyer-supplier relationships as smooth as possible.
SRM software can ensure that you and your teammates in the procurement and sourcing organization have a lot of information at hand to make informed and holistic buying decisions, so you’re not just buying based on price, but based on value.
The future of Supplier Management is data-driven.
But, the sad fact is that our personal applications have far surpassed our professional applications.
We talk about this all the time at Kodiak Hub... As a procurement professional you can gather more information and insights during your morning run than you’d ever have when you step into the office.
Directly in the palm of your hand you can see steps taken, hills climbed, and calories burned, but where’s that same intelligence when you step into the office and want to pick a preferred supplier based upon sustainability performance, find innovative supplier partners, or pull forward basic supply chain compliance summaries?
It’s not so easy, is it?
I’m sure many of you have these insights at hand, but they’re likely spread out in a plethora of solutions.
Your application ecosystem for managing suppliers might look a bit like this:
Credit checks are in D&B reports, or retrieved by your finance team | Performance metrics sit in SAP or your ERP solution | Supplier Collaboration takes place in Outlook | Segmentation, spend analysis, risk management and due diligence is sitting in Spreadsheets | Contract and compliance documentation in Sharepoint | Data visualization is in a BI solution | and your primary reporting is done by using Power Point
There’s nothing to be embarrassed, or ashamed about if this is your reality. because the reality is, this what you know, and many others work in this exact same fashion.
In 2018, it was reported by Bain & Company and Procurement Leaders that 60% of Procurement Teams had no tools, or relied on Microsoft Office tooling for SRM. When it came to risk management and category management, that number rose to 70%.
Even more recently, in late 2019, State of Flux reported that 86% of procurement teams were still using Excel spreadsheets as the primary software for managing supplier relationships and supplier information.
This kind of spread out and homegrown ecosystem can do the job when it comes to SRM.
At the same time this can make the job very manual and person-dependent.
Modern SRM software serves as a spider in the net, compiling 3rd party insights, existing data sets, and stakeholder input into one place.
It’s important that procurement teams work smarter, not harder, as time-saving on operational tasks will continue to be crucial during the coming years.
The fact is, We’ve entered into a new reality.
The COVID19 situation has challenged your procurement organization enough…
At the same time your Procurement, sourcing and supply chain teams have increasing demands - internally and externally - on your supply chain and more specifically on supply chain sustainability.
I don’t need to tell you… you’re living it!
- Consumers want more sustainable and quality products and services
- Legislation is requiring more supply chain transparency and visibility.
- And your senior Leadership wants to make sure you’re on top of these things to remain profitable, competitive and safeguard brand and shareholder value.
The common denominator to meet these increasing requirements… enhanced Supplier Management.
But, Ask yourself this question…
Do you have the tools you need?
Do you really have the tools at hand to manage your suppliers, build deeper supply chain transparency, meet legislative directives and enhance sustainable development in your global supply chain?
Maybe not… but maybe soon.
We're here today to show you the opportunities at your disposal. We want to show you that there is a simpler way of working. We're here to sympathize with your challenges, and to understand the internal and external pressures you're facing. We're here to highlight the importance of supply chain sustainability, and present;
6 ways that SRM software can help you to boost Supply Chain Sustainability.
Moving into the 1st point on our list of 6
1. KYS: Know Your Supplier
Know-Your-Customer (or KYC) is a well established discipline utilized by financial institutions as a means of compliance and risk management.
The growing business importance of global supply chains will require your procurement and sourcing team to quickly get a thorough view of prospective and existing supplier relationships in a similar fashion.
Hence the growing need for KYS
Knowing one's supplier is of increasing importance to safeguard shareholder value and ensure you’re collaborating with sustainable partners who fulfill environmental, social, governmental and financial requirements.
Information and trust have become a businesses most valuable currency. It’s important that you leverage data and information availability in order to build trust with new suppliers & partners, from the start.
Information such as financial status, sanctions, negative media or the engagement of politically exposed persons (pep) isn’t always information that’s easy to come by. Fulfilling this kind of KYS activities often entails manual search of a multitude of data sources, involvement of multiple teams in combination with home-grown risk assessments in excel as we indicated earlier in this session.
Modern SRM software can reduce time spent searching for KYS insights by offering KYS suites via natively integrated 3rd party insights.
Switching to the Kodiak Hub platform, we want to quickly display how SRM software can enable faster KYSSafe Source Macro gives us the opportunity to quickly view supplier risk across the world or narrow down and view a specific supplier and the risk related to the country they're located in. Contextual risk ratings gives you a complete overview with data built on Environmental, Social, Geo-political and Financial aspects.
From the map view you can quickly jump into a particular supplier and dive deeper into their profile. Here you'll be able to view insights and information like the first indication of KYS, which is: Credit Ratings - Pulling 3rd party data directly into our interface, fully integrated without long reports which gives the insights a procurement pro needs.
2. Streamline Supply Chain Compliance
94% of CPOs responded in a 2020 report by Procurement Leaders that they have reaffirmed or renewed their commitment to sustainability.
Commitment to sustainability is great, but action is even better.
All of us recognize WHY sustainable procurement needs to become the new norm. To better understand exactly HOW procurement teams are planning to enhance supply chain sustainability, Kodiak Hub published a poll on LinkedIn where 342 Supply Chain & Procurement pros responded to a Flash survey.
The Question: Which sustainability initiatives are currently most important in their current procurement practices?
Supply Chain Compliance took the prize.
Compliance remains one of the first steps to ensure you’re working with sound suppliers. SRM supported by software can streamline your ability to systematically address supply chain compliance directly during supplier onboarding, and with regularity during the supplier lifecycle.
Below you'll see some concrete examples of how Kodiak Hub's SRM solutions can make supply chain compliance easy.Either you import your supplier(s) via an API to your system, by exporting/importing an excel spreadsheets or add them manually with required data fields being: a Supplier Name, ID, Email and Country Code.
If you want, you can dive deeper into individual responses and view areas marked as risk areas and their individual questions & responses.
The data get fed into the overall supplier scorecard that you can see on each suppliers' profile together with a number of other functionalities like collaboration functions and messages, notifications for e.g. expiring documents, performance ratings and analytics. So that you quickly can see which suppliers that are compliant and not and/or who you should collaborate more with based on performance metrics.
3. Better Collaboration (Corrective Actions, Development projects & Version control)
Open lines of communication & collaboration are important to maintain during a supplier lifecycle.
Offering buyer-supplier platforms for basic communication are beneficial to creating an open partnership; utilized for sharing meeting minutes, version control of documents & contracts or other simple forms of communication. These kinds of communication platforms can also be utilized to address more tactical initiatives such as corrective actions & development projects.
Providing a simple way to push forward processes & confirm action responsibilities can go a long way to driving sustainable development in the supply chain.
In the Kodiak Hub platform you're able to view new, pending, ongoing or finished actions.
as well as jump into a specific action to see what's been said, which documents that might be missing or whatever the current action might be. Whenever you're satisfied with the responses or documents added you'll be able to approve, thus closing the collaborative action.
4. Enhanced Supplier Diversity
Supplier Diversity is an increasingly important focus area of supply chain sustainability, and with the right tools at your disposal, measuring diversity and rolling out supplier diversity programs can be a lot more impactful.
By definition, a diverse supplier is “a business owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group” (CVM)
Some common examples of diverse suppliers would be small-business enterprises (SBEs), minority-owned business enterprises (MBEs), and woman-owned business enterprises (WBEs). “Over time, the definition of diversity has expanded to businesses owned by other minority groups such as LGBQT, veterans, and proprietors with disabilities'' (HBR 2020).
Where does SRM come into play…
Classification and assessment during supplier onboarding activities are one of the key pillars to a stable and impactful supplier diversity program.
Just as you require general business and compliance information during supplier onboarding (category, contact details, spend, insurance and ISO certification ) you should require general diversity information to better segment and classify your supplier base.
In a 2019 report from CVM Solutions, State of Supplier Diversity—Diverse Suppliers it was found that 89% of diverse-owned businesses are certified as such by an appropriate agency. Certification of diverse suppliers is something that should be promoted, recognized, celebrated and incentivized.
In order to ensure that supplier diversity will create real economic benefits for small and diverse businesses your procurement organizations should aim to put targets on inclusive spending %.
Procurement holds the spend, and therefore the power!
More systematic SRM with the support of software can make sure you’re able to champion the change you want to see in your supply chain.
5. Better Due Diligence & Audits
Following up on levels of implementation is a perfect way to cement that supply chain compliance is actually being reflected in your broader value chain.
Due diligence in the form of Audits aren’t necessary in all organizations, industries or supply chains, but in those that Audits are important, they remain an integral aspect of any responsible sourcing program.
System support can greatly impact the outcome of an audit as being useful, or just plain busy work.
Traditionally speaking, audits create a lot of paper and PDF reports that can’t be leveraged to build deeper intelligence about a supplier or company.
Solutions, like Kodiak Hub, focus on leveraging audits as an opportunity to gather robust amounts of information and data about a supplier. Our on(SITE) audit app focuses on matching areas that are assessed by suppliers during initial onboarding & self-assessment with gauging real levels of implementation and objective evidence.
A perfect example of this would be that a supplier initially reports that they have a ISO 14001 certification for environmental management in place. The document is in fact verified certification. But, during the course of your relationship, you see that the supplier has been exposed to adverse media due to inconsistencies in their environmental management. You decide to do an audit.
With the aid of SRM software like Kodiak Hub...
- You can make a template that is ISO 14001 specific and match this within the KPI are of Environmental Management
- Send out to an auditor with which the auditor can access and manage via a mobile app or desktop
- In the app they can see the audit agenda
- Along the way, they can fill out the checklist take pictures, make notes, mark nonconformities, issue corrective actions and submit the audit upon completion
- As a user of Kodiak Hub, you’re provided with a sleek audit report, but the responses also factor into a suppliers overall rating, overriding the Environmental Management area in which they have previously assessed themselves. Giving you a lot more insights than a dead PDF report
6. Access Best Practices & Standards
To improve Supply Chain Sustainability, the last thing you want to do is try to reinvent the wheel
There exists a plethora of international, domestic and industry specific frameworks and best practices to measure sustainability performance, ensure supply chain compliance and enhance sustainable development in your organization.
Kodiak Hub recognizes that the greatest resource for building a collective knowledge base of sustainability best practices and standards is to have big ears.
We listen and learn from every customer we work with, and as an output, we’ve developed a global library of content to ensure our solution, can offer solutions for supply chain sustainability, rather than our customers needing to forge their own way forward.
The library is fit with content to address supplier compliance, risk, and performance in line with standard frameworks, and by drawing inspiration from our existing user base’s KPI management.
- Within the different KPI areas there are individual attributes which are desired, expected or measurable behavior or criteria.
- Each attribute has a question, and values associated with them that can be configured to your liking with weights, ratings, flags, risks. All depending on what's important for you and your supplier ratings.
With that, we'd like to thank you all for reading this - and we hope the content was able to inform and inspire, as we know there is a collective ambition of the readers here to enhance supply chain sustainability.