Strategic SRM: reinventing supplier management for resilience and growth in 2024

Supplier relationship management is increasingly being treated less as a soft skill and more as an operating discipline: a way to protect output, preserve resilience and improve performance when supply chains are under pressure. That shift is reflected in newer research as well as practitioner writing. A 2024 study in the Journal of Operations and Strategic Planning, based on 179 food and beverages companies in Ghana, found that SRM had a positive effect on operational perfor...

mance and that supply chain resilience significantly strengthened that link. Supply Chain Management Review, writing in the aftermath of the pandemic disruptions, argued that supplier management has become central to growth because supply itself has become a strategic risk. (doi.org)

That is a narrower and more practical idea than simply “maintaining good supplier relationships”. TechTarget describes SRM as a systematic approach to working with suppliers so a company can make better use of their capabilities, reduce costs, maintain continuity of supply and limit supply-chain risk. Dun & Bradstreet frames it as a broader model of governance, performance alignment, communication and long-term value creation, rather than something confined to purchase orders or contract administration. (techtarget.com)

Several of the supporting sources stress that SRM begins by accepting that not every supplier matters in the same way. Dun & Bradstreet says organisations typically divide suppliers into strategic, tactical and transactional groups, based on how hard they would be to replace and how much disruption they could cause. Its guidance says businesses should spend more time and structure on suppliers with the greatest operational or risk impact, while more standardised relationships can be handled with lighter-touch processes. That is an important corrective to the idea that every supplier should be managed identically or with the same intensity. (dnb.com)

The distinction also helps explain why SRM is not the same as procurement or vendor management. According to TechTarget, vendor management is largely concerned with costs and service-level agreements, while procurement focuses on the mechanics of ordering, contracting, invoicing and payment. SRM sits above those tasks. It is meant to organise the full relationship lifecycle, build a shared framework for communication and use performance measures to judge whether a supplier is contributing to wider business goals such as quality, responsiveness and innovation. (techtarget.com)

In practice, that means structured oversight rather than goodwill alone. TechTarget points to the United States Postal Service, which updated its SRM governance model in 2018 by cutting its supplier scorecard from nine measures to four standard metrics: timeliness, quality, cost and innovation. Relationship managers could still add optional measures, including corporate social responsibility or product-specific quality factors such as software performance. The example matters because it shows SRM as something measurable and repeatable, not just a matter of rapport between buyers and vendors. (techtarget.com)

The contemporary case for SRM has also widened beyond savings. In Supply Chain Management Review, former Johnson & Johnson chief procurement officer Len DeCandia argued that the real change is moving procurement from a transactional brief of “Get me the best price!” to a strategic one: “Help me build a network of suppliers that drive value”. He linked that change to several forces that the original article does not explore in depth: customer digital evolution, the Covid-19 pandemic, rising ESG expectations, severe weather risk and geopolitical volatility. In that account, supplier relationships matter because boards, investors and customers now care about resilience, traceability and social responsibility as much as unit cost. (scmr.com)

Academic work in the package broadly supports the claim that SRM improves performance, but it also adds useful qualifications. A 2020 paper in the VNU Journal of Economics and Business examined data from 304 manufacturing plants across four Asian countries, collected between 2013 and 2015, and reported a positive relationship between SRM and operational performance. The authors also noted that the literature remains mixed and that SRM is still often muddled with traditional purchasing management or treated as a subset of logistics and supply-chain integration. In other words, the evidence is supportive, but the concept is not always consistently defined or measured. (js.vnu.edu.vn)

The Tanzania study in Emerald’s IIMT Journal of Management adds another layer of nuance. Surveying 202 small-scale grape-processing firms in Dodoma, the researchers found that buyer-supplier relationships, supplier development and supplier selection were all positively and significantly associated with business performance. However, knowledge transfer showed no relationship with performance in that sample, and the strength of the overall SRM effect depended significantly on firms’ logistics capabilities. That suggests SRM is not a magic wand: companies also need the internal capacity to move goods, coordinate operations and act on what suppliers provide. (repository.mocu.ac.tz)

Taken together, the seven sources point to a more demanding conclusion than the lead article offers. Strong supplier ties still matter, but the real value of SRM lies in deciding which suppliers are strategically important, building governance around those relationships, measuring performance consistently and linking supplier decisions to resilience, innovation and risk. Businesses that treat SRM as a formal, cross-functional capability are likely to be better prepared not only to trim waste, but also to withstand disruption and turn their supply base into an advantage rather than a vulnerability. (dnb.com)

Source: Noah Wire Services