Just picture having a customer relationship management (CRM) application to improve and record high-frequency and complex interactions with your suppliers and have all that communication connected to most ideal supplier quotations and agreements throughout your business. This truly is exactly what enterprise resource planning (ERP) with an embedded SRM solution can deliver.

 

Smoother Supplier Interactions – SRM in Focus

 

A good SRM solution will need the ability to allow users to trace supplier interactions, including formal RFI/RFQ processes that result in Supplier Agreements or Purchase Orders. It will address requisitions to order through shipment monitoring and goods arrival, dealing both direct and indirect materials — including support for authorizations. Users can then use supplier schedules to facilitate forecasts and call-offs in repetitive environments.

 

React to Trade Policy Change & Cooperate With Supply Chain Partners

 

Corporations gradually operate on a global stage and should be able to adapt to fast changes in trade policy, which could restrict supply and increase landed cost. An SRM solution can better prepare you for this by bringing purchasing, the supplier and the end customer together into a single view. Using an SRM solution, businesses can decide to lock in longer-term pricing agreements with suppliers in regions potentially affected by protectionist trade policy.

 

Additionally, it is possible to collaborate with your supply chain partners to divide up the issues caused by tariffs or non-tariff barriers. This then helps you help answer key buying questions such as: Is the vendor going to absorb that added cost, or is it going to be passed on to the customer or divided up among the supplier, your company and your customer? Because all the necessary information can be captured by ERP with embedded SRM, this lets the landed cost of the item to be computed, place into inventory value and then, after reviewing basic cost realities, a determination can be made on what action will be taken.

 

A Holistic, Controlled Approach

 

A thorough SRM approach gives companies the timely information they need to negotiate with and make better actions about vendors, which is vital in a speedily changing global trade environment. It is also a good fit for multisite companies operating globally.

 

This type of software has benefits for the supply chain team, such as enabling them manage by exception. In an ideal solution, they can arrange the system to let most purchases proceed with less interventions, but they may opt to subject certain purchases to greater review. This includes those without a default supplier, purchases above a certain dollar threshold, buys that align with specific projects or other cost centers that may have their own procedures or processes, and any purchases that are not for the acquisition of production raw materials.

 

Business processes are often separate between different people in the business, for regulatory and risk management purposes, and good SRM software will enable businesses to keep a single person from creating a supplier record, authorizing a purchase order to them and then receiving the product. These preventive integrity controls can be automated using data on each user’s role and permissions. This segregation of duties can also help companies doing business globally adjust to many jurisdictions’ compliance frameworks including Sarbanes-Oxley and security best practices.

 

Part Management for Better Decision-Making

 

Part information by supplier could also be operated permitting for better decision-making. To provide an example, a part may be expedited by picking out a various shipping method. Or the same part may be obtained from a different supplier for a faster lead time and at a lower expense but with the added hassle of performing inspections internally. This dovetails with materials requirement planning (MRP) and planning for required lead times. It should accommodate complex purchasing and scheduling functions including scheduling by part and supplier, supplier splits, project-or progress-based billing, and costing via landed cost. But in a global environment, the ability to find part information by supplier will help a manufacturer mitigate emerging risks among suppliers that may come under sanction, or those located in potentially politically or economically unstable regions of the world.

 

Purchasing – an Operational Requirement

 

More than almost any other business discipline, purchasing is interwoven with the fabric of the business. That just means your SRM solution is required to be part of a tight, enterprise-wide ERP suite that lets purchasing and supply chain professionals to drive more value for their associates around the company and around the world. It must automate and improve much of the administrative overhead associated with purchasing, but it also can be a powerful tool in making sure of compliant and minimal risk purchasing on a global scale — exclusively at a time of increasing volatility.

 

This article is originally posted on tronserve.com