Supplier Relationship Management Software (SRM) Information
Supplier relationship management (SRM) software enables businesses to manage the relationship between buyers and suppliers. Procurement personnel use SRM software to define replenishment strategies, manage contracts, evaluate supplier performance, and establish strategic sourcing relationships. Event management tools such as alerts and notifications help minimize inventory stock-outs and stockpiles. Collaborative planning tools enable managers to exchange order forecasts with vendors and maintain a supplier scorecard with historical data.
Typically, supplier relationship management (SRM) software is integrated with a larger enterprise resource planning (ERP) system. Supplier relationship management (SRM) software can also used with customer relationship management (CRM) software to speed order fulfillment. In this way, SRM software covers the buy-side of the supply chain while CRM software covers the sell-side. Supplier relationship management (SRM) software is designed to assist businesses with each phase of the procurement cycle. First, buyers use SRM software to submit a request for proposal (RFP) or request for quotation (RFQ) to multiple vendors. Competitive bidding features and contract negotiation tools help companies select the best vendor for a project or product line.
In many organizations, Web-based supplier relationship management (SRM) software is used to communicate with vendors in real-time. Using a web browser, a buyer can check the status of a shipment or the scheduled date of a delivery. For their part, suppliers can monitor stock levels to determine when the buyer’s inventories need replenishment. Collaborative tools allow buyers to share order forecasts with suppliers and identify potential bottlenecks based on historical analysis. Supplier relationship management (SRM) software enables businesses to select suppliers based on a variety of criteria. Buyers can compare vendors based on factors such as price, past performance, or a combination of both. The use of a weighted formula is especially important when a vendor with the lowest cost fails to deliver shipments on time, or delivers raw materials that often need to be scrapped. Supplier relationship management (SRM) software should reflect a procurement organization’s business rules and reflect standards such as Six Sigma, a methodology that prevents defects in manufacturing and service-related processes.