According to a study released by UK supply chain consulting firm State of Flux earlier this month, many companies are failing to see a destinction between supplier performance and supplier relationships. Out of 223 procurement, supply chain, and supplier relationship managers surveyed, 62% said that they did not have an accepted definition of supplier relationship management at their company. To set the record straight, according to State of Flux supplier performance management (SPM) is about how well suppliers are doing what they initially said they would do in a contract. Supplier relationship management (SRM) refers to a collaborative, two-way relationship that can deliver value to both parties.
Clearly, both of these things are important for the success of any company. Suppliers are a crucial part of production for any business and it's important to ensure they are operating up to standard. If not, it could lead to major problems. Meanwhile, it's important for organizations to have healthy communication with their suppliers in order to tap into their industry knowledge, and come up with new ideas for products, services, and ways things can be run more efficiently and cost-effectively.
