Strategies for Supplier Relationship Management

Strategies for Supplier Relationship counselingSupplier Relationship Management (including analysis) is the counselling an ongoing transaction relationship to guarantee competitive advantage for an organisation. The focus is on over all(a) in all relationships betwixt the supplier and the buying organisation rather than a focus on a specific contract. Its aim is to support purchasing and tune counseling to develop an orderly deduceing of the nature of current relationships that know indoors and between the organisation and the suppliers (OGC, 2009).Supplier relationship commission is a comprehensive fire to managing an endeavours interactions with the organizations that picture the goods and returnss it uses. The goal of supplier relationship management (SRM) is to streamline and make more effective the processes between an enterprise and its suppliers just as customer relationship management (CRM) is intended to streamline and make more effective the processes betwee n an enterprise and its customers (SAP 2008).Buying organisations go through a essential to manage not only if their contracts scarce also their suppliers. A number of suppliers impart have multiple contractual relationships with individual departments and it is therefore grand for them to be proactively managed. The process will be supported by information generated from the motion management arrangements that will be in place for each of the contracts, still this process is much more about the overall relationship rather than on natural process on a specific contract (SAP.com 2008).OBJECTIVESThe objectives for SRM includeReduction in costsService ameliorationSolution developmentFlexibility and mutual realize(Adapted from Procurement Leadership 2006)There will also be the opportunity for emendment in the overall relationship with the supplier progressing in the direction of increase partnering sheath arrangements. This will potentially includeEstablished communication channels at all levels, up to and including CEO, between the organisationsJoint planning and forecasting at a strategical levelIncreased trustEnhanced collaborative approaches and perspectiveImproved value for some(prenominal) parties(Adapted from OGC 2009)Supplier Relationship Management (SRM) is aimed at streamlining the supply stove by improving the communication between an enterprise and its suppliers. (PROCUREMENT -LEADERS, 2006).It streamlines the processes between an enterprise and its suppliers in the same way Customer Relationship Management (CRM) makes the processes between an enterprise and its customers more effective.In actual fact SRM utilizations enable a common frame of reference to improve communication between enterprise and supplier who whitethorn be used to different practices and terminology. Eventually SRM softw be can lower crosswayion costs and result in a broad(prenominal) quality, lower priced end product (SAP 2008).Modern SRM solutions support the whole procurement process in the company, including procurement strategy, qualification of suitable suppliers, tenders and contract design, and monitoring supplier performance.2.2 THE IMPORTANCE OF IMPLEMENTING SRM STRATEGY/PLANSRM is becoming progressively more important for enterprises because, in the competitive global environment, purchasing-related savings are equally important as sales.In the past ten years, significant results have been generated through rationalising supply bases, introducing competition and moving to low cost countries. But recently results from these activities are diminishing, which is where SRM comes in (PROCUREMENT LEADERS 2006).When SRM is effective, companies improve on profitability, growth, market share and reputation.SRM is especially important when there is a limited supply base for a product and in this case, the peanut company has oneness supply and it is a major priority of the peanut company to maintain a good relationship with the supply. T his is to say that the joint society has a full monopoly on the supply of nuts to Peanutty. A good relationship is necessary to avoid sudden increase in price, supply of quality products, and also the supply can decide not to supply to Peanutty. They therefore have a need to manage not only their contracts but also their suppliers.There will also be the opportunity for improvement in the overall relationship with the supplier progressing in the direction of increased partnering type arrangements.This will potentially includeEstablished communication channels at all levels, up to and including CEO, between the organisationsJoint planning and forecasting at a strategic level. Peanutty should encourage their suppliers to focus more on the strategic path to cooperative success and enhanced collaborative approaches and perspectiveIncreased trust between the supplier and Peanutty, by finding compromise solutions to problems enhance both Peanutty Company and the cooperative supplier pas s towards achieving the long-term returnssImproved value for both parties, the contract of the product enhances the ability of both Peanutty and the cooperative supplier to have a clear vision towards its benefits.3.0 QUESTION 2 What activities could be developed by Peanutty to expurgate or manage the power of its customers to minimize risks and maximize profitability?Peanutty is a shaper of ingredients for the nutrition industry and also a serve provider of food items for large companies in the sector.Peanutty should use the strategies of customer relationship management (CRM).3.1 CUSTOMER RELATIONSHIP MANAGEMENTCustomer Relationship Management, or CRM, is an important part of young descent management. Customer Relationship Management concerns the relationship between the organization and its customers. Customers are the lifeblood of any organization be it a global corporation with thousands of employees and a multi-billion turnover, or a sole trader with a handful of regul ar customers. Customer Relationship Management is the same in principle for these two examples it is the stretch of CRM which can vary drastically.Customer Relationship Management focuses on the relationshipSuccessful organizations use three steps to build customer relationshipsdetermine in return satisfying goals between organization and customersestablish and maintain customer rapportproduce positive feelings in the organization and the customersIn the business world, the organization and the customers both have sets of conditions to consider when building the relationship, such as hopes and ask of both parties these conditions includeorganizations need to make a profit to survive and growcustomers fatality good emolument, a quality product and an acceptable priceCRM can have a major impact on an organization through change over the focus from product to customer, streamlining the offer to what the customer requires, not want the organization can make and also highlighting competencies required for an effective CRM processThe last-ditch purpose of CRM, like any organisational initiative, is to increase profit. In the case of CRM this is achieved mainly by providing a better service to your customers than your competitors. CRM not only improves the service to customers though a good CRM capability will also reduce costs, wastage, and complaints (although you may see some increase initially, simply because you hear about things that without CRM would have stayed hidden). Effective CRM also reduces staff stress, because attrition a major cause of stress reduces as services and relationships improve. CRM enables instant market research as good opening the lines of communications with your customers gives you direct constant market reaction to your products, services and performance, far better than any market survey. Good CRM also helps you grow your business customers stay with you longer customer churn rates reduce referrals to new customers increa se from increasing numbers of satisfied customers demand reduces on fire-fighting and trouble-shooting staff, and overall the organizations service flows and teams work more efficiently and more happily.3.2 Features of good CRMThe old base in industry was Heres what we can make who wants to buy our product?The new viewpoint in industry isWhat exactly do our customers want and need? andWhat do we need to do to be able to produce and deliver it to our customers?This is a significant change of paradigm and a quantum leap in terms of how we look at our business activity.What do customers want?Most obviously, and this is the extent of many suppliers perceptions, customers want cost-effective products or services that deliver required benefits to them. (Benefits are what the products or services do for the customers.) Note that any single product or service can deliver different benefits to different customers. Its important to look at things from the customers perspective even at this level.More significantly however, customers want to have their needs satisfied. Customers needs are distinctly different to and far broader than a product or service, and the features and benefits encompassed. Customers needs generally extend to issues far beyond the suppliers proposition, and will frequently include the buying-selling process (prior to providing anything), the way that communications are handled, and the nature of the customer-supplier relationship.Modern CRM theory refers to the idea of integrating the customer. This new way of looking at the business involves integrating the customer (more precisely the customers relevant people and processes) into all aspects of the suppliers business, and vice versa. This implies a relationship that is deeper and wider than the traditional arms-length supplier-customer relationship.The traditional approach to customer relationships was based on a ingenuous transaction or trade, and little more. Perhaps there would be only a s ingle point of contact between one person on each side. All communication and dealings would be between these two people, even if the customers organization contained many staff, departments, and functional requirements (distribution, sales, quality, finance, etc).The modern approach to customer relationship management is based on satisfying all of the needs people, systems, processes, etc across the customers organization, such as might be affected and benefited by the particular supply.(business balls 2002).Designing and implementing a successful CRM programmeStep 1 Creating the CRM planActivities Understanding the objectives, fit with Peanuttys strategy, development of software, costing and trainingStep 2 Involve CRM users from OutsetPeanutty should establish a project/management team from all affected organizational area.Step 3 Select the right finishing and providerUse of internal IT tools to analyse and compare available products and suppliersStep 4 Integrate Existing CRM applicationCentralised database containing customer information for all CRM associated user to actively involved in each customer.Step 5 Establish doing measuresUse of performance measurement to evaluate if strategies have been met or notStep 6 Providing CRM training for all usersDuring implementation, Peanutty should provide training to all employees actively associated with CRM about it benefits and objectives.(MARKETING TEACHER 2000)4.0 QUESTION 3 evaluate the benefit of performance measurement systems to this company?4.1 PERFORMANCE MANAGEMENTPerformance refers to output results and their outcomes obtained from processes, products, and services that permit evaluation and comparison relative to goals, standards, past results, and other organisations. Performance can be expressed in non-financial and financial terms.Measurement refers to numerical information that quantifies input, output, and performance dimensions of processes, products, services, and the overall organisation (outcomes). Performance measures might be simple (derived from one measurement) or composite (BPIR 2007).Performance measurement system is an assessment system of measurement that represents a formal efficient approach to observe performancePerformance measurement is the process whereby an organization establishes the parameters inside which programs, investments, and acquisitions are reaching the desired results. This will be needed most especially in the roast and peanut preparation line, so that the target of 12 hour per day will be attained.4.1.1 PM focuses on results, rather than behaviours and activitiesA common misconception among supervisory programs is that behaviours and activities are the same as results. As a result, an employee may appear extremely busy, but not be contributing anything toward the goals of the organization. An example is the employee who manually counts the number of peas processed. The supervisor may conclude the employee is very committed to the orga nization and works very hard, thus, deserving a very high performance rating, where by his output is poor.4.1.2 Aligns organizational activities and processes to the goals of the organizationPM identifies organizational goals, results needed to achieve those goals, measures of effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve the goals. This chain of measurements is examined to ensure alignment with overall results of the organization. This is payable to the fact that the employees complain about not knowing the direction and goals of peanut company.4.1.3 Produces meaningful measurementsThese measurements have a wide variety of recyclable applications. They are useful in benchmarking, or setting standards for comparison with best practices in other organizations. They provide consistent basis for comparison during internal change efforts. They indicate results during improvement efforts, such as employee training, management development, quali ty programs, etc. They help ensure equitable and fair treatment to employees based on performance.mr Carmelo doesnt treat the employees like they are part of the organisation, probably because he is not aware of the effort these workers put into the company. therefore wit performance, he will be able to quantify the level of dedication and then will he will recognise their capability and potential, and thus give them Moore responsibility.Performance measurement will clarify expectations of roles and responsibilities of all the work stations in the peanut factory. It will also make it possible for the director, supervisor and the employees to discuss work related issues and develop solutionsThe will also be able to formally review performance and achievement of agreed goals and objectivesProvide two-way face to face feedback and also link individual performance to broader strategic plans and depict objectives.(Adapted from Supplychainer 2005)Overall, this will help Peanutty to set t heir long term strategy goals, work on their objectives, meet their target and measure the performance.5.0 QUESTION 4.The supply chain process i would suggest is the lean manufacturing process.5.1 draw Manufacturing is an operational strategy oriented toward achieving the shortest possible cycle time by eliminating waste. It is derived from the Toyota Production System and its key thrust is to increase the value-added work by eliminating waste and reducing incidental work. The technique often decreases the time between a customer order and shipment, and it is knowing to radically improve profitability, customer satisfaction, throughput time, and employee morale (ROCKFORD 1999).The characteristics of lean processes areSingle-piece productionRepetitive order characteristicsJust-In-Time materials/pull schedulingShort cycle times tender changeoverContinuous flow work cellsCollocated machines, equipment, tools and peopleCompressed spaceMulti-skilled employeesFlexible workforceEmpowere d employeesHigh first-pass yields with major reductions in defectsThe term Lean is very apt because in Lean Manufacturing the emphasis is to cut out the fat or waste in the manufacturing process. Waste is defined as anything that does not add value to the customer. It could also be defined as anything the customer is unwilling to pay for.For example, if you order a shirt to be custom made, it may take 6 weeks. However the actual time the tailors or seamstresses are working on the shirt is only 5 hours. The rest of the time is interpreted up by such things as material ordering, waiting between processes and inefficient shipping practices. This extra time does not add value to you, the customer. As Lean Manufacturing principals are applied to the shirt-making process, one would see a reduction in delivery time from 6 to 5 to 4 weeks and even less. The beau ideal shirt-making operation would be streamlined to give you, the customer, what you want, when you want it at the lowest possib le cost within the least amount of time (CONTINENTAL DESIGN engineering 2008).5.2 Lean identifies seven types of wasteOver-Production Obviously a product that cannot be sold or has to be dumped at a reduced price is wasteful. overly producing product before the customer needs it requires the part to be stored and ties up money in inventory.Inventory Excess Inventory ties up a spacious deal of cash, which is wasteful. Stockpiling inventory between processes is wasteful.Conveyance Unnecessarily moving a part during the production process is wasteful. It can also cause malign to the part, which creates wasteful rework.Correction Having to re-work parts because of manufacturing errors is a large source of waste. Additionally, sorting and inspecting parts is wasteful and can be eliminated by error proofing (designing your processes so that the product can only be produced one way, which is the correct way, every time).Motion Unnecessary or awkward operator motions put undue stre ss on the body and cause waste. Improvement in this area should result in reduced injury and workmans compensation claims.Processing Unclear customer requirements cause the manufacturer to add unnecessary processes, which add cost to the product.Waiting The operator being idle between operations is wasteful. It is acceptable for the machine to wait on the operator, but it is unacceptable for the operator to wait on the machine.The 5S is a core method of lean manufacturing.Sort The first stage of 5S is to organize the work area, leaving only the tools and materials necessary to perform daily activities. When sorting is well implemented, communication between workers is improved and product quality and productivity are increased. Sort is the act of throwing off the unwanted, unnecessary, and unrelated materials in the workplace.Straighten (Set in order) The second stage of 5S involves the orderly arrangement of needed items so they are easy to use and accessible for anyone to find. order of magnitude eliminates waste in production and clerical activities.Shine this means keeping everything clean and swept. This maintains a safer work area and problem areas are quickly identified. An important part of shining is Mess Prevention. In other words, dont stick out litter, scrap, shavings, cuttings, etc., to land on the floor in the first place.Standardize The fourth stage of 5S involves creating a consistent approach for carrying out tasks and procedures. Orderliness is the core of standardization and is maintained by Visual Controls.Sustain This last stage of 5S is the discipline and commitment of all other stages. Without sustaining, your workplace can easily revert back to being dirty and chaotic. That is why it is so crucial for your team to be empowered to improve and maintain their workplace. When employees take pride in their work and workplace it can lead to greater job satisfaction and higher productivity.6.0 SUGGESTION FOR PERFORMANCE step6.1 BENCHMARK ING6.1.1 Benchmarking is a continuous measure of products, services and practices against firms best competitors. It is the process of evaluating and understanding the current position of a business in relation to the best practice to make out areas that need improvement and the means of improving performance.Benchmarking involves looking outward (outside a particular business, organisation, industry, region or country) to examine how others achieve their performance levels and to understand the processes they use. In this way benchmarking helps explain the processes behind excellent performance. When the lessons learnt from a benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organisation or in key areas of the business environment (Tutor2u).Application of benchmarking involves four key stepsUnderstand in detail existing business processesAnalyse the business processes of othersCompare own business performance with that of others analysedImplement the steps necessary to close the performance gapThe goal of benchmarking is to identify the weaknesses within an organization and improve upon them, with the idea of becoming the best of the best. The benchmarking process helps managers to find gaps in performance and turn them into opportunities for improvement. Benchmarking enables companies to identify the most successful strategies used by other companies of comparable size, type, or regional location, and then adopt relevant measures to make their own programs more efficient. Most companies apply benchmarking as part of a broad strategic process. For example, companies use benchmarking in order to find breakthrough ideas for improving processes, to support quality improvement programs, to motivate staffs to improve performance, and to satisfy managements need for competitive assessments.I choose Benchmarking because it targets roles, processes, and critical success factors. Roles are what defin e the job or function that a person fulfils. Processes are what consume a companys resources. Critical success factors are issues that company must address for success over the long-term in order to gain a competitive advantage. Benchmarking focuses on these things in order to point out inefficiencies and potential areas for improvement (Reference for Business 2010).By using all types of benchmarking (Internal, external, functional Generic) Peanutty will be able to identify internal or external standard recognized leaders and compare the current process that was implemented for its process.Benchmarking performance measurement system will allow Peanutty to have clear vision towards its current process (internally) and its competitors (competitors) in order to have continuous improvement to achieve its goals on cost reduction and high quality products.