With the impact on travel and global supply networks, supplier management and supply chain management became even more important than before during the COVID epidemic. Companies that prioritized strategic sourcing and strategic supplier relationship management fared significantly better during the storm. Management has two very unconventional approaches to supplier relationships.
In an approach in which firms only manage supplier relationships when problems arise, they try to figure out how to improve the performance of untrustworthy suppliers. This method consumes a significant amount of time and resources that could have been better spent on other critical business procedures. This is known as a reactive approach.
The strategic approach begins before a contract with a supplier is signed to ensure the company’s long-term competitive advantage. Key stakeholder input and long-term gain measures are implemented. This is a strategic, forward-thinking strategy that can lead to a successful partnership even in its early stages. Regardless of industry, a strategic approach to supplier relationship management has always been critical for successful firms that rely on third-party suppliers. Businesses can use supplier relationship management strategies to create a more efficient and effective working relationship with their suppliers. Here are four of them:
SRM Strategies
- Establish each party’s roles and responsibilities.
The first step in developing a more effective supplier relationship is defining each party’s roles and responsibilities. This will ensure that everyone understands their role in the relationship and what is expected of them.
- Develop a communication strategy.
It is critical to have a communication strategy in place so that everyone knows how and when to communicate with one another. This plan should include who will be responsible for communicating, how frequently communication will occur, and what methods will be used (e.g., email, phone, in-person meetings, etc.).
- Establish performance benchmarks.
Setting performance expectations for both parties is essential for the relationship to be effective. This includes establishing expectations for quality, delivery, and other critical business factors.
- Encourage a collaborative culture.
Finally, it is critical to foster a culture of collaboration between the company and its suppliers. This can be accomplished by encouraging open communication, mutual respect, and a focus on working together to achieve common goals.
Let’s now shift the radar onto the challenges of Supplier Relationship Management faced by India.
India’s SRM Challenges
SRM faces several challenges, including the country’s vast geographical size, a large number of suppliers, and the often-complex relationships between suppliers and buyers. Furthermore, cultural differences can make communication and negotiation difficult.
The first obstacle is India’s sheer size. The country has a population of over 1.3 billion people and a land area nearly three times the size of the European Union. This vastness makes it difficult to manage the supply chain and keep track of suppliers. Furthermore, the large number of suppliers can be overwhelming, and it can be difficult to build relationships with all of them.
The second challenge is the cultural differences between India and other countries. India has a very different culture from most Western countries, making communication and negotiation difficult. There are frequent language barriers, and different business customs can make understanding each other difficult.
The third challenge is the frequently complex relationships between suppliers and buyers. In India, family-owned businesses are common, and buyers and sellers frequently have close personal relationships. This can make it difficult to manage supplier expectations and negotiate contracts. Despite these challenges, SRM is an essential process for organizations doing business in India. Organizations can improve their efficiency and bottom line by streamlining their supply chain and improving communication with their suppliers.
