Ch. 7 Supplier Relationship Management (SRM)

3. Development of Networked Exchanges (2005-current)

- transformation of the current field of independent and consortia marketplace into fully networked exchanges featuring robust functions such as single-data models and joint order management, procurement, financial services, logistics, and network planning that facilitate multibuyer/multiseller interaction and collaboration.

Trading Exchange: horizontal

- range from simple portals to sophisticated collaboration hubs. Ability to enable multibuyer/multisupplier interaction and collaboration. 1. e-business portals 2. one to many marketplaces (PTX) 3. aggregator hubs 4. broker hubs 5. collaboration hubs 6. translator hubs

Supplier Relationship Management (SRM)

-SRM is the nurturing of continuously evolving, value-enriching relationships between supply chain buyers and sellers that requires a firm commitment on the part of all trading parties to a mutually agreed upon set of goals and is manifested in the collaborative sharing and timely and cost-effective networking of sourcing and procurement competencies to facilitate the entire material replenishment life cycle from concept to delivery

Internet-Driven SRM

The utilization of B2B e-marketplaces can be expected to achieve the following benefits: 1. Increased market supply and demand visibility 2. Price benefits from Increased competition 3. Increased operational efficiencies 4. Enhances customer management 5. Improved supply chain collaboration 6. Synchronized supply chain networks

2. Rise of Collaborative Commerce 2000-2005

- focus on expanding the functions necessary to conduct collaborative procurement and addressing the issue of managing materials and components to be used in manufacturing.

e-SRM enablers

- SRM provides an environment where a company plans to win with its supplier by establishing a common value chain for the long term sourcing and procurement of a buyer's critical production inventories rather than simply commodity transactions. they seek to possess the following enablers: 1. expands the scope of procurement functions 2. provides for deep integration of business processes 3. facilitates direct collaboration between manufacturers and their suppliers 4. enables increased speed and flexibility

1. Foundations 1960-2000

- establishment of the basic B2B model - confined to the use of independent portals utilizing online catalog, providing real-time order transaction and management, etc. - sought to offer products and services though techniques like aggregation, performing buyer-seller matching, and hosting auction. - focused on the buying and selling of MRO and non-production inventories

Trading Exchange: vertical

-act as hubs servicing a single industry. 1. virtual distributors 2. exchanges 3. enablers

Trading Exchange: buyer driven

-simple B2B model enables companies to facilitate internal procurement by linking through internet tools division, partners, or companies in order to drive corporate purchasing processes and supplier relationships.

Purchasing Function

-the body of integrated activities that focuses on the purchasing of materials, supplies, and services needed to reach organizational goals. In a narrow sense, purchasing describes the process of buying; in a broader context, purchasing involves determining the need; selecting the supplier; arriving at the appropriate price, terms, and conditions; issuing the contract or order; and following up to ensure delivery

Components of SRM:

1. Enabling technologies 2. Strategic sourcing and supply management 3. Customer-centric infrastructure and operations

e-SRM Development Periods

1. Foundations 1960-2000 2. Rise of Collaborative Commerce 2000-2005 3. Development of Networked Exchanges 2005- current

SRM Market Pressures

1. Increasing Requirements for Supply Chain Collaboration 2. Increased Demand for Risk-Sharing 3. Enabling Power of Internet Technologies 4. Focus on Continuous Improvement

Major types of B2B

1. Independent Trading Exchanges (ITX)- many to many networked through an intermediary. Can be divided into vertical exchanges (trading functions to a particular industry) and horizontal (products/services common across multiple industries) 2. Private Trading Exchanges (PTX)- one to many. hosted by a single company that recommends or requires trading partners participate in as a condition of doing business 3. Consortia Trading Exchange (CTX)- some to many. a few powerful companies organized into a consortium and their trading partners.

Basic Purchasing Activities

1. Sourcing 2. Value Analysis 3. Supplier Development 4. Internal Integration 5. Supplier Scheduling 6. Contracting 7. Cost Management 8. Purchasing and Recovering 9. Performance Measurement

SAS's SRM Solution

Best of breed SAS's SRM solution consists of the following software applications: 1. strategy alignment and score carding 2. opportunity exploration 3. detailed analysis and reporting 4. procurement score card 5. spend analysis 6. ranking 7. optimization 8. data cleansing

Why SRM?

SRM enables enterprises to effectively do the following: 1. Stratify the supplier base: so that procurement can easily identify those suppliers that are most strategic to the organization 2. Construct the governance for the supplier relationship: guiding how the purchasing organization is to manage buyer/supplier interactions across the life cycle of the supplier relationship 3. Determine the process of supplier development leading to closer networking and process visibility 4. Establish appropriate performance measurements

Implementing e-SRM

steps to implementing a successful e-SRM 1. e-SRM value discovery 2. infrastructure analysis 3. preparing for organizational change 4. spend analysis 5. item/service analysis 6. e-SRM technology choices 1. SaaS 2. Automation Applications 3. Portals 4. Exchanges and Auctions 5. PTXs and CTXs 7. Performance Measurements 1. Monitoring tools 2. Collaboration 3. Process control 4. Procurement intelligence

Trading Exchange

the effective application of e-SRM depends on thoughtful decision-making regarding the optimal procurement strategies and choice of Internet applications. 1. Buyer Driven e-Marketplaces 2. Vertical e-marketplaces 3. Horizontal e-marketpaces