Reference no: EM132210566

Research basic information about Supplier Relationship Management (SRM) software.

1. What is SRM software and what is it used for?

2. Define and discuss the key functionalities (capabilities) of supplier relationship management software. Elaborate on each of the key functionality in your own words, explaining what it provides to the users and organization.

3. What are the two types of SRM software and what is the difference between them?

4. What are the key benefits of using SRM software in a organization?

5. What are the key challenges in implementing SRM software in a organization?

6. Provide examples of companies offering SRM software.

There is no minimum or maximum number of words or pages required, however your answers to the above question prompts must be complete to receive full credit.

SRM software is a streamlining processes and communication between buyer and supplier using software applications. SRM software automates the exchange of information resulting in, improved procurement efficiency, lower business costs, real-time visibility, faster communication between buyer and seller, and enhanced supply chain collaboration. Five key points of an SRM system are the automation of routine transactions, the Integration spans multiple departments, processes, & software applications, the visibility of information & process flows, the collaboration through information sharing and optimization of processes & decision making.

With supplier relationship management (SRM) use within enterprise resource planning (ERP), product lifecycle management (PLM) and supply chain management (SCM) applications to ensure an effective implementation of cross-application business processes. The supplier relationship management (SRM) is the systematic approach of assessing suppliers’ contributions and influence on success, determining tactics to maximize suppliers' performance and developing the strategic approach for executing on these determinations. It helps to create positive buyer-supplier relationships and determines which activities to engage in with each supplier. Supplier relationship management is used by supply chain professionals involved in areas such as procurement, project management and operations where these professionals regularly deal with suppliers. SRM includes both business practices and software.

The goals of the supplier relationship management can vary from organization to organization, the typical goal of SRM is to streamline and improve processes between a buyer and its suppliers, the organizations that supply the goods and services, just as customer relationship management (CRM) is intended to streamline and improve the processes between an enterprise and its customers. Underlying SRM is the focus on developing a mutually beneficially relationship with suppliers, especially those deemed as most strategic to the brand, to promote quality, efficiency, innovation and other benefits.

Supplier relationship management has become increasingly important as buyer-supplier networks become more global and interdependent and companies rely more heavily on strategic suppliers. SRM practices create a common frame of reference to enable effective communication between an enterprise and suppliers and to measure supplier performance.

The process of supplier relationship management is just as the definition suggests and can vary, depending on which organization defines it, the processes of strategic sourcing related to SRM can vary as well. However, these broad categories can be used to understand the following important supplier relationship management processes:

Segmenting suppliers, which categorizes suppliers based on their importance to the business, developing governance and performance management models to align business processes and assign stakeholders according to business goals and improving relationships with suppliers, which involves sharing strategic information with key suppliers in order to develop better products and services.

The foundational step of supplier relationship management is determining suppliers' contributions, especially in light of their strategic importance to the success of the business. Different suppliers have different influence on organizational profitability. As a hypothetical example, ABC Smartphone Company's stationary supplier has little influence on the outcome of its profitability, but its main electronics supplier has a huge impact. Any risk to the electronics maker's operations is a major risk to ABC Smartphones. This makes the electronics maker a key strategic partner.

There are many different supplier relationship types and levels. While some in the field of supply chain management believe that supplier relationship management applies only to the key partners, others believe the discipline encompasses all suppliers, although the degree of time, attention and other resources given to a strategic supplier will be far more than one that is a transactional supplier.

After the process of supplier segmentation, stakeholders must determine strategies and core processes. Working with key strategic suppliers where appropriate, this involves the appropriate stakeholders setting up internal governance processes, assigning to specific groups or individuals specific supplier relationships. It also involves setting up and measuring operational measures, with stakeholder reviews to make sure that processes are on track.

One major benefit of supplier relationship management is the possibility of working with strategic partners to increase innovation either through process improvement, product development or both.

Note that although supplier relationship management can be applied to all levels of partners, the goals vary at different levels. Whereas with a transactional vendor, it would not be appropriate to focus significant resources on managing the partnership, and lowering costs will likely be a focus area -- a key supplier requires a partnership approach that reflects its strategic contributions. One example of the importance of SRM is practicing supplier relationship management that can lead to lower production costs and a higher quality, but lower priced, end product.

The two types of SRM software are Transactional SRM and Analytic SRM. Transactional is used to track supplier interactions such as order planning, order payment and returns focuses on short-term reporting and is event driven. Analytic allows the company to analyze the complete supplier base and focuses on long-term procurement strategies. The benefits derived from automating procurement activities, significant cost savings as buyers move toward managing processes by exception. Greater procurement visibility from using SRM software also translates into, smoother processes, reduced product development, faster cycle times, streamlined purchasing, improved time to market, and reduced inventory costs

Typical SRM challenges that operations encounter are difficulties in developing, implementing and operating partnerships. SRM requires a completely different mindset, which makes SRM a complicated exercise. The most severe challenge is the dominant role of costs. Cost reduction is an essential part of value creation but too much focus on this aspect discourages a long-term orientation. However, SRM requires completely different skills like influencing, leadership and change management. Other key challenges include a lack of training, no specific SRM strategy & objectives, no harmonised way of working.