Supplier relationship management
The contract is signed and the savings are booked. What happens over the following three years decides whether they were real.
The problem this solves
Every supplier is managed the same way, so the vendor supplying 40 per cent of critical spend gets the same attention as the one supplying stationery.
Performance is discussed anecdotally, usually when something has gone wrong, and there is no agreed measure to point at when it does.
Nobody owns the relationship between contract signature and renewal, so problems surface late and leverage has evaporated by the time anyone acts.
What we actually do
The steps, in the order we run them.
Segment the base
Suppliers are segmented by spend, risk and strategic importance, so effort goes where it changes an outcome. Most organisations find a small number of vendors carry most of the exposure.
Define what good looks like
Performance measures agreed with the supplier and the internal owner, tied to the contract rather than invented afterwards, and few enough that they are actually reviewed.
Run the governance
Review cadence proportionate to segment, with the right people in the room and actions that carry owners and dates.
Develop, do not just monitor
For strategic suppliers, joint improvement plans covering quality, service, cost and innovation. This is where the relationship starts returning more than the contract promised.
Manage risk
Continuity, concentration, financial health and compliance tracked as a standing item rather than discovered during an incident.
What you get
- A segmented supply base with named internal owners
- A performance framework and scorecard per segment
- A governance calendar with agendas and escalation paths
- Joint improvement plans for strategic suppliers
- A supplier risk register kept current by your team
On managed vendors our clients see supplier performance improvement of 90 per cent or more against the baseline measured at the start of the engagement, and problems surface early enough to be fixed commercially rather than legally.
Questions we get asked
How many suppliers should we actively manage?
Far fewer than most organisations attempt. Segmentation usually shows that 20 to 40 suppliers carry the spend and the risk that justify a governance cadence. Managing 300 relationships equally means managing none of them properly.
Do we need SRM software?
Not to start. The framework, the measures and the cadence deliver most of the value. Tooling helps once the process is running and you know what you want it to track, which is the opposite of the usual order.
How do we get suppliers to engage with this?
By making it worth their while. Strategic suppliers engage when the review gives them forward visibility, faster decisions and a route to more business. A scorecard that only points out failures gets endured, not engaged with.
What if a critical supplier is underperforming and hard to replace?
That is a concentration risk and it needs both a commercial response and a structural one. We work the performance issue while building the option to move, because leverage you do not have cannot be negotiated with.
Where to start
Run the free procurement maturity diagnostic for a scored view of where the gaps are, or talk to a consultant about this specific problem. Both take less time than a meeting about having a meeting.
Talk to a consultant