It was the period when McKinsey consultant Peter Kraljic defined corporate buyers to grow more proactive in supply management that Supplier Relationship Management (or SRM) came into life in the year 1983. Since then it has been a great source for the development of various sectors such as Supplier Relationship, Drug Safety and Electronic Data Capture (EDC) Clinical Data Management (CDM).
Based on an organization’s categories’ risk, profitability impact and formulate supplier management strategies, Peter had put forth an important statement that buyers should look to understand the respective efficiencies accordingly. In fact, it neither affects the absence of stationery supplies which is at a significant risk nor the company’s profitability. A major risk for the big-name brands and its suppliers, such as Apple has been created upon the shutdown of some of the leading technology manufacturers. It was speculated that a great rivalry in terms of strategic alliance caused complicated scenario for manufacturers like Apple and Foxconn.
In order to observe successful strategic partnerships, a major commitment from buying organizations is needed. It is also applicable to the processes involved in Clinical data management and drug safety. Executive sponsorship added with careful cross-planning is required to meet a lot of requirements involving a massive number of meetings. Along with stationery contracts, one should be well equipped to manage these relationships for the purpose of meeting a substantial demand.
To determine the supply categories that are important and creating the strategies that manage a lot of items in an intelligent fashion, Supplier Relationship Management (SRM) is very essential.
The threefold necessary phase in SRM is the process of Map suppliers as opposed to profitability and risk exposure which comes under supplier segmentation. The distribution of internal resources including the plans to meet business needs under the Supplier strategy development category. The final and comprehensive phase is Supplier strategy execution. A common misconception in procurement is that SRM is not equivalent to collaborating with key strategic partners. Clinical data management sector faces this issue quite often while partitioning SRM. Even some of the mature organizations will frequently talk about ‘doing SRM’ to suppliers within large corporations involving senior buyers.
As much as strategic partners, a genuine Supplier Relationship Management process must encompass stationery companies. We see a slight differentiation in supplier segmentation where the category in question is not important and therefore significant resources should not be placed in managing suppliers that service these goods. Bundling similar items into a single, global contract as well as creating a ‘light-touch’ approach to sourcing will be the major emphasis of the strategy in question. A suitable environment to cut costs on a commoditized good is created with the employment of e-auction platforms, whereby a multitude of suppliers competes in an online auction to lower price.
In the point of view of the purchasing organization, strategic partners demand much care and attention. Therefore, as an initiative to set-up palpable prospects between both parties, it is important to share the plans such as providing sensitive commercial information to a partnership including the design of its preparation and its own activities around the buyer’s long-term strategy. Buyers get stricken by the unwanted squandering of a strong negotiating position along with an open invitation to intentionally increase costs for suppliers. However, it has to be understood that a strategic partner differs from a transactional vendor in a way that the ultimate insight of a buyer should be to maximize profitability and to lower risk.
In general, an enormous value of an organization’s business shall be created with the implementation of SRM. It provides an alternative partnership dynamics using which the buyers could fundamentally shift their perception though it might be difficult to handle the move to true supplier relationship management.
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