Will the Use of Supplier Relationship Management (SRM) Replace Category Management?
Procurement has traditionally been organised around the concept of category management, yet procurement practitioners are beginning to ask whether supplier relationship management is, in fact, more appropriate. This subject was hotly debated by the 16 delegates who attended CASME’s Category Management RoundTable in Dubai last week.
The activities being undertaken by procurement functions based in the United Arab Emirates are rapidly expanding. Delegates reported that their current responsibilities include managing short-term issues concerning COVID-19 and preparing for the 2020 World Expo which takes place in Dubai during October.
- According to the delegates, the six key features of a category management approach are:
- Understanding spend, and using supplier analysis plus market intelligence to gain knowledge and proactively anticipate stakeholders’ thinking
- Using templates and contract repositories from a clearly-defined library
- Developing contracts, helped by the use of ‘clause’ banks to avoid recreating everything new each time
- Establishing a ‘contract for dummies’ to help stakeholders, including other tools such as cheat sheets
- Agreeing high-level global contracts, but providing for regional agreement and being open to considering reciprocal trade
- Engaging SRM with a few selected suppliers. Once a programme is in place, working to align the suppliers with the business strategy and validating the relationship by conducting 360-degree reviews.
Delegates agreed that in the long-term, the key to Procurement’s success will be primarily due to the strength of relationships. It is highly likely that SRM will replace traditional category management structures, regardless of whether that will happen within five, ten or fifteen years. The best is yet to come!