- Supplier relationship management is a critical piece of the puzzle when it comes to running a successful business.
- Having a supplier relationship is an extremely important element to ensure business continuity and success.
- SRM can be successfully managed by first identifying your suppliers, measuring their performances, implementing a proper plan, managing the relationship, and much more.
- Negotiating MSAs with your consulting providers is one way to make sure you get what you need while keeping costs down.
- Having a preferred list of suppliers has several benefits including it helps you make better business decisions, it saves time, you have more control over procurement and prices.
- Supplier Relationship Management in consulting is an incredible tool to help businesses maintain relationships with their suppliers while also streamlining their operations.
So, you’re a frequent buyer of consulting services, right? That means you must be pretty savvy when it comes to managing supplier relationships. But do you know the nitty-gritty of SRM? It’s like the secret sauce that makes your supplier interactions extra tasty.
Think of it like this: Supplier Relationship Management is to supplier relationships as spice is to french fries. Sure, fries are great on their own, but add a little peri-peri and suddenly they’re irresistible. Same goes for your supplier relationships. Understanding Supplier Relationship Management can take your business from good to great.
But the question is, where should you start? Supplier Relationship Management involves different policies and processes for tracking supplier performance and engagement, ensuring compliance with regulations, maximizing benefit from vendors and more.
To help guide your efforts in making sure you are taking the right steps when it comes to Supplier Relationship Management, we have created this comprehensive guide on Supplier Relationship Management for Consulting (2023).
In this definitive guide, you’ll find advice on developing successful relationships with suppliers while remaining cost-conscious while still gaining access to quality resources. Furthermore, learn valuable insights into how technology can make Supplier Relationship Management easier as well as guidelines for improving communications between internal teams and external partners.
With helpful tips ranging from organization strategies to measuring supplier performance throughout all stages of a project lifecycle – this definitive guide will ensure that your firm’s brand value remains at its highest level!
What Is Supplier Relationship Management?
I know that most of you reading this perhaps know the what supplier relationship management is all about, but I’d like to walk you through it once more before diving into the whole subject of SRM in detail.
Supplier relationship management is a critical piece of the puzzle when it comes to running a successful business. No matter how well you’ve streamlined operations on your end, if the link in the supply chain that connects you to your supplier isn’t functioning, it can have real-world consequences for your enterprise.
Crafting the right kind of relationship with your suppliers takes time and effort but providing clear expectations, timelines and payment policies is just the start of building an effective rapport.
The type of relationship should depend largely on what type of goods or services you’re procuring; if they’re highly essential to your organization’s success, evaluating these partnerships and expecting higher standards from them may be necessary.
Juggling relationships with many different suppliers isn’t easy – but investing in familiarity with each supplier sets everyone up for success down the line.
Why Is Supplier Relationship Management So Important?
A supplier relationship is an extremely important element to have for business continuity and success (as you’ve probably heard in our Procurement Game Changers podcast episode “Supplier Relationship Management in Procurement” with Head of Strategic Sourcing at Fitch Group, Mr. Kevin Giblin).
Sure, a contract and Service-Level Agreements (SLAs) are important but building a true relationship with them can help your organization become more innovative and successful.
By building trust and understanding between both parties, your supplier can act as an advisor to help you push past the standard metrics that show performance. Even when it comes to data like KPIs, they could use their expertise and offer insights to set your business up for success – only if you build that trust with in the first place.
Moreover, Supplier Relationship Management is often seen as being connected to tools and systems, but its success really comes down to having the right infrastructure in place – if you only focus on the tools, your Supplier Relationship Management journey won’t go far.
It’s like the old saying: if you try to put a patch over a broken process, all it does is make that broken process more visible. Tools can be an additional asset for sure, but they aren’t going to prop up a foundation that’s already shaky.
Ultimately, having effective Supplier Relationship Management doesn’t rely solely on the tools available; it depends much more on the underlying structure and program that you have put in place.
How to Manage the Relationship with Your Consulting Suppliers?
Supplier Relationship Management (SRM) is a major topic for consulting services. The manner in which procurement manages consulting providers should align with the company’s overall SRM procedures. So, the question is, how do you manage this relationship? Well, read on to find out!
#1. Identify Your Strategic Suppliers
Strategic suppliers are an important part of any successful supply chain. Companies should always look beyond simple expenditure when assessing which supplier is truly strategic.
Establishing a criteria to identify these key suppliers can often be a challenge, but taking into account factors such as the type of services being provided, and any unique skillsets needed for particular projects, can often provide an indication.
Applying the same principles of vendor segmentation across all categories is essential to maximize profitability and customer satisfaction outcomes. Only with careful consideration can businesses effectively identify their most valuable suppliers, irrespective of their spend or size.
#2. Qualify Your Suppliers
Even for consulting services, suppliers must be qualified. The majority of these suppliers’ requirements are based on testimonials from previous clients, case studies, and pertinent thought leadership. Moreover, two points of attention need to be adhered to:
- Number one, the references should be pertinent to the breadth of your qualifications. If you wish to qualify John Doe Consulting for Innovation Management projects, for instance, they must provide references for their Innovation Management or Innovation capabilities.
- And number two, remember that consulting has a significant human element. Significant influence is exerted on a project by the partners or project managers, however this influence, which consists primarily of intrapersonal skills and knowledge, is not transferrable. Typically, the partner that initiates the partnership will be the account owner and be in charge of the majority of tasks. Request recommendations from the individual’s personal initiatives.
When inviting a consulting firm to participate in a new capability, do not hesitate to request further relevant references. If references are with your competition, do not hesitate to use the assistance of a third party.
#3. Measure Their Performance
Measuring the performance of consulting suppliers is a tricky endeavor, primarily because providing services is no easy task and renders itself difficult to evaluate. However, this evaluation can certainly be attempted by considering the three classic factors of time, quality and cost – if all these align then it can be said that the project was executed properly.
Furthermore, gauging the satisfaction levels attained by the sponsor and leader of the project will enable one to ascertain the impact of the consulting team’s efforts. This is perhaps even more important than tangible metrics since success in such lines of work also depends on elements like talent and soft skills: for instance, being able to form positive relations with colleagues or maintaining excellent client service standards.
Thus, it is imperative that firms pay closer attention to evaluating their consulting suppliers rather than dismissing it as an intractable difficulty.
#4. Implement Supplier Improvement Plan
Creating and maintaining relations with suppliers should be a priority to ensure the continuous improvement of any project. This is especially important when monitoring supplier performance through the Performance Assessment.
Problems need to be addressed quickly and effectively by setting up an improvement plan in the initial stages. Giving suppliers an opportunity for feedback regarding the scoping and management of consulting projects is also smart business sense, helping to ensure that future cooperation runs smoothly.
This kind of open communication allows both parties to gain from a successful collaboration and provides opportunities to develop an even stronger relationship going forward.
#5. Manage the Relationship
A close and mutual relationship between a consulting firm and their clients is critical for the success of projects. Regular meetings are the best way to keep Strategic and Preferred Suppliers in-the-know and provide them transparency into Performance Assessments results.
Implementing Category Management for the consulting category can drive significant savings, as well as increase returns on investments. The challenge lies in fostering a collaborative environment within large companies, where cross-functional teams need to build trust to succeed.
However, because decision-making and knowledge for such projects tend to rest solely with the project leader, a more flexible and intimate approach is often necessary to optimize the outcomes of consulting services.
#6. Leverage Consultants’ Insights
Working with the same consulting firm on successive projects can bring immense benefits to your business. The familiarity that is gained not only allows you to streamline your processes and benefit from decreased costs, but it also provides a unique opportunity for insight.
Simple questions such as “How do you think my company compares to the competition?” or “What would you do if you were in my shoes?” can yield surprising answers that give true insight into how well your operations are performing.
In an astonishingly short period of time, this kind of dialogue could shed new light onto areas that need improvement, or simply provide a valuable reality-check to assess where your business is doing well. Thus, don’t overlook the opportunity to check in with your consultants and get honest feedback about your operations!
#7. Negotiate MSAs with Your Suppliers
Building and managing relationships with your consulting providers or suppliers is a big part of running a business. It can also be time consuming and complex, especially if you’re trying to get the most out of your suppliers for the best price.
Working with consulting vendors is essentially like a marriage: you’ve got to keep communication lines open and be consistently engaged if you want things to run smoothly and be successful.
Negotiating MSAs (master service agreements) with your consulting providers is one way to make sure you get what you need while keeping costs down. These agreements provide both parties with clear visibility around services expected and performance standards that must be met, in addition to streamlined contracting processes.
By providing this structure, you will be setting yourself up for long-term success and trust between you and your providers, while also saving money in the process!
What Are the Benefits of Having a List of Preferred Consulting Suppliers?
It’s a daunting task to stay on top of costs, negotiate for the best deal, and steer clear of potential risks when your organization has lots of suppliers. To make sure that these processes are as efficient and transparent as possible, it is beneficial to maintain a preferred list of suppliers.
This will benefit both the supplier and the organization at large. With a preferred list of suppliers on hand, organizations can quickly identify those companies that are dependable, offer up quality services, provide competitive pricing and have a good reputation and track record.
Moreover, having a list like this eliminates all guesswork so businesses can save time and money while selecting reliable partners instead of taking risks with unproven companies. Thus, let’s examine some of the benefits of having a list of preferred vendors.
#A. Helps in Making Effective Business Decisions
Having easy access to supplier information and making purchasing easier for stakeholders is key for any business success. There’s no better way to ensure that than by employing a digital sourcing system that links internal and external parties while delivering up-to-date data.
Not only that, but it will also guarantee that your vendors offer the best value for your organization in terms of pricing, quality, economic stability, and contract terms.
Furthermore, once you’re buying from established suppliers, you’ll have more leverage when negotiating prices which means saving money in the long run. Implementing a digital sourcing system should therefore be seen as an investment in your company’s future.
#B. Helps Save Time
Finding the right consulting services can take up a lot of time, which can be a hassle if you have to go through a bidding process, collect multiple quotes and then negotiate contracts.
However, it doesn’t always have to be so complicated; if you’re able to discuss the scope of the project immediately and agree on a price, everyone involved in the procurement process can avoid unnecessary admin work and put their focus into their true roles.
All stakeholders will benefit from this easier process since it gives everyone more time to focus on what matters most.
#C. More Intimacy
Having a list of preferred vendors can be incredibly advantageous for any organization, giving them more flexibility and control over their consulting activities.
Establishing strong relationships with these vendors means that they will develop intimacy with your company, meaning that they will know where you stand, what you have done before, and what you can to achieve.
It will make them almost ”plug-and-play”: quicker to get to work and easier to onboard. Communication is also improved as having a consistent source of suppliers allows you and them to create a language understood by both parties.
To sum up, making use of a preferred supplier list can lead to fewer misunderstandings and greater maturity in terms of how consulting is procured and delivered. Narrowing down your spending categories to decide on your most important consultants is key to achieving the best possible project outcome!
#D. Better Control Over Prices
Having a preferred list of suppliers can be an incredibly helpful way to manage your purchases. Not only will it simplify the search process and make ordering easier, but it also has potential to save you money. By prioritizing quality vendors with competitive prices, you can use your preferred list as an effective tool for negotiating prices.
However, if you want to take full advantage of this system, it’s important that you pay close attention and track which suppliers offer the best value for your needs in terms of products or services. That way, when it comes time to purchase again, you’ll get the most bang for your buck with your preferred list of vendors.
How To Create a Dynamic Preferred Consulting Supplier List?
Creating a list of suppliers that is tailored to the needs of the business, dynamic and up to date can seem like an overwhelming task. But with the right 3 essential components, you can develop and maintain a list on which you can rely over time.
#1. Spend Analysis
Spend analysis is an integral part of creating a dynamic list of suppliers. By doing detailed research into the spending and market trends related to a particular company, informed decisions can be made on supplier selection.
Without such rigorous analysis, companies would not be able to choose reputable and reliable vendors who will provide the most cost efficient goods with the least amount of risk.
Through spending analysis, costs can be trimmed while simultaneously ensuring that product quality is maintained at a safe level – thereby assuring that stakeholders interests are looked after every step of the way.
#2. Performance Evaluations
Performance evaluations are essential for creating a dynamic list of suppliers, as they help to identify who is able to provide high quality results and meet your organization’s expectations.
Evaluations also allow you to compare vendors, narrow down the list of potential partners, and collaborate with those capable of aiding in innovation and growth. Through evaluating performance capabilities, criteria such as effective communication style, responsiveness, dependability, and overall efficiency can be assessed to ensure the best providers are chosen on all levels.
Implementing this kind of evaluation process is an invaluable asset towards discovering which suppliers offer all that your organization needs.
#3. Need for the Next 12 to 24 Months
When creating a dynamic list of preferred suppliers, for the next 12 to 24 months, it is prudent to look at not only current needs, but also project what may be necessary in the future.
When selecting suppliers, price and quality should always be considered while taking into account any existing relationships; this balances short-term gains with long term stability and returns. Taking the supply base of current vendors into account will provide vital insight into pricing and quality confidence levels.
Furthermore, ensuring that alternative sources are available so as to maximize cost savings yet maintain service level agreements is essential to enhancing any bottom-line benefits. With proper planning, a sound list of trustworthy suppliers can easily be created for the long-term rewards.
Why Are Some Companies Neglecting Their Supplier Relationships?
In one of our recent podcasts, we had the pleasure of hosting Mr. Kevin Giblin as our guest speaker, where he shed light on the common misconceptions surrounding Supplier Relationship Management (SRM). Unfortunately, these misconceptions often result in companies neglecting their supplier relationships, especially if they prioritize short-term cost savings over long-term benefits.
This short-sighted approach may lead companies to focus solely on securing the lowest possible prices from their suppliers, without considering the impact on their supplier relationships. Such an approach can cause irreparable damage to the relationship and can negatively affect the quality, consistency, and reliability of the supplies or services provided.
Moreover, some companies view their suppliers as interchangeable and replaceable, which undermines the value of investing time and resources in cultivating a strong, mutually beneficial relationship. Consequently, they fail to recognize the importance of building long-term partnerships and collaborating with suppliers to achieve shared goals.
Finally, some companies may lack the necessary resources and expertise to effectively manage their supplier relationships. This can lead to a lack of dedicated staff, tools, and processes to manage supplier relationships effectively. As a result, these companies may face difficulties in achieving optimal supplier performance, leading to neglect and poor outcomes.
How Can Procurement Help with Strategic Relationship Building?
Strategic relationship-building, expenditure management, performance management, PSRs, risk analyses, and other processes can all benefit from procurement.
By keeping your consultants close, you can ensure that they understand your requirements; they’ll almost be “plug and play,” allowing you to launch projects faster. Furthermore, if they are aware of your situation and you are a loyal customer, they will be more willing to make price concessions.
The issue is that in many organizations, consulting is purchased directly by the end user, and procurement occurs at best during the negotiation phase. However, developing relationships with strategic consulting suppliers is not an easy task. It’s a full-time job in and of itself.
It takes both experience and the right set of skills, and the consequences of not doing so can be severe when you rely on personal feelings and make decisions based on subjectivity rather than knowledge.
In short, while it may appear that developing a secure relationship with your suppliers is simple, it is actually more difficult, requiring insights into technical skills and experience to achieve the perfect balance of expectations and negotiation.
And if you can build a trusting relationship with strategic consulting suppliers and pay attention to the competition for success, you will have a much easier time selling when trying to meet your strategic objectives.
The issue is that procurement is often sidelined to administrative tasks like contract management, purchase orders, and payments. Unfortunately, this frequently results in poor supplier and management seats.
Strategic misunderstanding and support results from a lack of experience and knowledge. As a result, in order to reach optimal solutions, you should leverage their skills and experience and invest both time and resources in understanding supplier needs.
As a result, in order to maximize the value of your projects while keeping costs under control, you must reach a higher level of maturity in consulting procurement.
And it’s extremely rare to achieve it without the help of an experienced procurement team, because procurement is so much more than just shopping around for the best deals.
Supplier Relationship Management in consulting is an incredible tool to help businesses maintain relationships with their suppliers while also streamlining their operations.
You now possess the knowledge and resources to forge successful supplier relationships through Supplier Relationship Management practices. It is never too early or too late to incorporate these techniques into your operations, as there is always room for improvement.
The sooner you start implementing them, the better positioned you’ll be to maximize opportunities and drive future growth. Consider adding new processes and update existing ones regularly to ensure your organization benefits from strong supplier relationships that are well-managed.
Adopting Supplier Relationship Management strategies will undoubtedly benefit your business today and in the future. Why wait any longer? Get started today and begin taking control of your supplier relationships!