What is SRM²?
Expanding on a previous post on the real (and hidden) meaning of SRM:
I want to cover in more details what it means.
In the story above, I highlighted:
- the symmetry behind the acronym,
- the focus on value that it embeds.
Today, I want to explain in a visual way what SRM² means for Procurement, its role, and its position.
The old way: antagonism, bottleneck, price…
The way Procurement used to handle suppliers is called “supplier management”. Although I use the past tense, some organizations still do supplier management. They, I hope, are on the verge of extinction.
Supplier management’s characteristic is a focus on price. The discussions happen between the Sales and the Procurement sides. Supporting roles on both sides never talk to each other as Sales and Procurement want to keep control of the relationship as any parallel discussion may interfere with the price discussions.
Sales and Procurement are “control freaks”.
This model creates a bottleneck.
Therefore, Procurement organizations must evolve towards a management of relationships, SRM².
The new way: trust, collaboration, value…
The model centered on relationships is a collaborative one.
Collaboration between the supplier and the customer and collaboration inside each organization (with stakeholders).
It is the foundation of SRM².
For the model to work, a certain number of conditions exist. One is trust:
- between the supplier and the customer,
- between the Procurement organization and the other departments,
- between the Sales organization and the other departments.
These three “circles of trust” are the building blocks of a true dialogue (instead of one-way communications). This dialogue is inclusive; not exclusive. It creates intimacy.
Update: Since I published this article on Medium, I have covered SRM² in more details here: https://media.ibisworld.com/2016/12/14/massive-problem-at-the-heart-of-srm/
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