Friday 7th Aug 2020 - Logistics & Supply Chain

Risk management and standardisation key to SRM rise

Supplier risk management and standardising processes are the key factors behind implementation of a supplier relationship management (SRM) tool, according to a poll of purchasing professionals conducted by Ivalua and released yesterday (Monday).

Trending in Procurement surveyed 283 purchasing professionals in Europe (60 per cent) and North America (40 per cent) between June and September. Supplier risk management was highlighted by 75 per cent of those polled as the key determinate behind implementation of an SRM tool, with 72 per cent claiming process standardisation as a key reason.

The survey noted that economic uncertainty, and a rising number of failing companies, as a result of the financial crisis had made supplier risk management a priority challenge. “One that often leads them to make use of specific tools to minimize these risks,” it said. Reducing “excessive complexity” in the procurement process was given as a factor behind the desire towards process standardisation.

“Setting up an SRM tool is a key step in dealing with the problem of supplier data that is dispersed and heterogeneous,” said the survey. “Because it allows the various supplier inclusion, selection, tendering and assessment processes to be standardised across an entire group.”

The poll identified several key challenges in deploying an SRM tool, namely rationalising the procurement categories and aligning company and procurement strategies, with the former receiving 100 per cent of respondent vote, and the latter receiving 92 per cent.

In addition, the survey noted a disparity between the way companies in North America and Europe run their supplier repository, with 85 per cent of respondents from the former noting that this is controlled by their procurement/purchasing departments, compared to 50 per cent from Europe.

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