Mind The Gap

December 4th, 2006 at 07:19am David Bush - Iasta

Tapping Into … Managing Suppliers
Collaborative sourcing and supplier relationship management software may both have a place in your organization, but it’s not the same place. They are two distinct approaches to managing suppliers. In order to reap the benefits of both, mind the gap — know when to keep them apart and how to bring them together.

So starts the recent article Mind the Gap in the November issue of Inside Supply Management which points out that the economic benefits of collaboration are clear, but only if its managed both effectively and selectively. “The wrong approach to collaboration may increase costs instead of cutting them, create confusion instead of clarity and drive suppliers away (even into bankruptcy) instead of bringing them on to the team”.

This can be due to the common mistake of “confusing two very different ways of managing suppliers — one way is through the use of supplier relationship management (SRM) software and the other is through full and open collaboration”.

Although the article does a great job of clarifying the difference between SRM and open collaboration, as well as providing the three requirements for effective collaboration, it does not do a good job of pointing out where each belongs in the sourcing cycle.

Although SRM can start pre-award, full collaboration should not begin until after an award decision has been made and a contract, which protects the proprietary and confidential information of both parties, has been put in place. SRM software, which monitors and tracks a supplier’s product quality, delivery, reliability, continuous improvement, innovation, and other performance metrics, based upon market and supplier data, can be used to scorecard suppliers during the RFX process. Collaboration, however, requires commitment. Confusing the two could impact the efficiency and effectiveness of your sourcing cycle and lead to hostility if you did not select the supplier(s) you were collaborating with before the award was determined since they might assume that they were going to be selected.

Entry Filed under: General, Supplier Performance, Suppliers, Supply Management Best Practices

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