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Supplier Relationship Management Created by: J. Russell Haynie Brigham Young University.

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Presentation on theme: "Supplier Relationship Management Created by: J. Russell Haynie Brigham Young University."— Presentation transcript:

1 Supplier Relationship Management Created by: J. Russell Haynie Brigham Young University

2 AGENDA -Definitions -Building Solid Relationships -SRM Systems -SRM System Capabilities -Brainstorming -Toyota/Honda Example -The Bottom Line -Works Cited

3 Definition -A comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services it uses. -SAP

4 The Power of Trust -Company Strength Trust is stronger than fear. Partners that trust each other generate greater profits, serve customers better, and are more adaptable - Nirmalya Kumar - Proctor and Gamble Example

5 SRM Systems -Spend Analytics - Are we using cash wisely with our suppliers? -Sourcing Execution -Are we using the correct suppliers based on our needs? -Procurement Execution -Are we getting the right materials from our suppliers?

6 SRM Systems -Payment -Is the current payment method conducive to our needs? -Supplier Scorecarding -How do our suppliers match up when compared to important attributes? -Performance Monitoring -According to our expectations, how well are our suppliers meeting those expectations?

7 SRM System Capabilities: Allowing a company to grade suppliers through computerized date to: -Create spend transparency -Develop detailed profile of supplier base -See more opportunities for sourcing materials and services -Prioritize suppliers on company's desired attributes -Ensure the quality of purchased items -Ensure appropriate levels of supply

8 Brainstorming Exercise Game Theory Exercise -How would you use SRMS from the companys and suppliers point of view. -What are the benefits to having trust? -Are there benefits to acting non- trusting? Supplier Company Trust Not Trusting 8, 8 10, 1 1, 101, 1

9 Toyota and Honda -Survey of Principle Measures of Manufacturer-Supplier relations in the U.S. Auto industry - Toyota/Honda ranked 1 st and 2 nd as most preferred companies to work with because: -Better Communicators -More Trustworthy -More Concerned with suppliers profitability -US companies avg. of 2-3 years for new car design while Toyota/Honda had avg. of months. -Promoted Innovation

10 Toyota and Honda -Both Toyota and Honda have used the same American suppliers as Ford, GM and Chrysler. -What did they do different?

11 -Understand your suppliers competency. -Learn about suppliers business -Supervise suppliers -Provide constant feedback. -Develop suppliers capabilities -Help supplier innovate and problem solve -Share relative information -Insist on accurate data -Use meetings to problem solving and learning -Improve supplier practices -Exchange best practices with suppliers Toyota and Honda

12 Quotes Honda is a demanding customer, but it is loyal to us. American automakers have us work on drawings, ask other suppliers to bid on them, and give the job to the lowest bidder. Honda never does that. – CEO, Industrial fasteners supplier to Ford, GM, Chrysler, and Honda, April 2002 In my opinion, Ford seems to send its people to hate school so that they learn how to hate suppliers. The company is extremely confrontational. After dealing with Ford, I decided no to buy its cars. - Senior Executive, Supplier to Ford, October 2002

13 Quotes Continued Toyota helped is dramatically improve our production system. We started by making one component, and as we improved, Toyota rewarded us with more orders for more components. Toyota is our best customer. - Senior Executive, Supplier to Ford, GM, Chrysler, and Toyota, July 2001

14 The Bottom Line Strategic Supplier Relationship Management adds value to your company by bettering your interaction with suppliers. Trust and information flow are key to the successful relationship.

15 Works Cited - Enright, J. Michael (2003). Buy-Supplier Relationships. Centre for Asian Business Cases, The University of Hong Kong. -Foster, S. Thomas. (2010). Managing Quality Integrating The Supply Chain 4 th Ed. Upper Saddle River, NJ: Prentice Hall. -Kumar, Nirmalya (1996). The Power of Trust in Manufacturer- Retailer Relationships. Harvard Business Review. -Liker, Jeffrey K. and Thomas Y. Choy (2004). Building Deep Supplier Relationships. Harvard Business Review. -http://searchsap.techtarget.com/sDefinition/0,,sid21_gci871756,00.html


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