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Inside Supply Management Magazine Masthead

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Ori Amrami, April 24, 2013

Very nice article and it covers the SRM complexities very well. It is worth noting that although SRM is indeed a separate and distinct activity from SPM (Supplier Performance Management), they are still very much interconnected. It is very difficult to spend time and energy (not to mention getting the necessary buy-in from Management) on the strategic aspect of the relationship if a lot of time needs to be spent on ensuring performance dependability. I have seen this play out in quarterly business reviews with key suppliers: in the beginning you may spend 80% of the time on reviewing KPIs and understanding root causes while spending only 20% of the time on business development and value creation. Once, however, the "tactical" day-to-day performance is under control you end up spending the majority of your time exploring and pursuing those strategic opportunities.

The "Supplier Segmentation" tool was not mentioned in the article but I have found it to be an effective method for developing and implementing an effective SRM strategy. This tool evaluates suppliers and "places" them in one of four categories - Routine, Leverage, Bottleneck, and Strategic Alliance - based on a questionnaire and the Strategic Sourcing professional then uses it to determine the suppliers one should develop an SRM program with.