SRM Defined
Supplier relationship management (SRM) is a method used to manage a company’s relationships with the organizations that supply the goods and services it needs. The aim of SRM is to simplify and enhance the interactions between a company and its suppliers. It is often linked with automated procure-to-pay business processes, assessing supplier performance, and sharing information with suppliers. An e-procurement system is an example of an SRM application.
Benefits of SRM Software
1. Improving the sourcing process can lead to reduced cycle time and cost by simplifying and making it repeatable.
2. With electronic ERP forms, performing comparisons is made easy and efficient. The software automatically consolidates data, simplifies presentation, and facilitates analysis and selection. Additionally, the price can encompass the total cost of ownership.
3. By using standardized purchasing, decentralized buyers can operate similarly to centralized ones.
4. We’ve made some communication improvements that allow for faster and even fully automated processes. As an example, suppliers now have the ability to check the inventory of buyers.
Components of SRM System
The following are the different types of interfaces and services provided by Supplier Relationship Management (SRM):
1. Internal interfaces: The most common interface for SRM systems is ERP systems. They provide information about procurement history, open orders, operations synchronization, accounting, purchasing planning, supplier performance measurement, and supplier database.
2. External supplier interfaces: SRM systems can be linked to the internet or use electronic data interchange (EDI) links or ERP links to facilitate direct transactions such as requisitioning, purchase order (PO) generation and tracking, logistics, receiving, payment, and credit. Portals can be used for messaging or collaborative design.
3. SRM analytics: These systems use decision support systems (DSS) to solve issues related to materials, information, and finances. For example, it could recommend using a substitute good rather than expediting. Other features include strategic sourcing and RFQ analysis, spend analysis, value analysis, and performance analysis.
4. SRM services: These services go beyond arm’s length transactions and initiate strategic sourcing searches or other supplier searches.
5. SRM procurement: The goal of this service is to streamline the procurement process by providing interfaces to online trade exchanges or auctions, as well as transactional purchasing. B2B tools include product search, supplier search, and custom searches by content or parameter. Special pricing, payment processing, order status and tracking, and after-sale support are also provided.