Does SRM need trust to succeed?

by Mel Shutes, Head of SRM at State of Flux

 

Genuine competitive advantage is most often created by a series of partnerships made up of two or more players in the supply chain. If a designer comes up with a great product they will need somebody to manufacture it, somebody to market it, ship and distribute it, and finally somebody to retail it and provide support or service. These partnerships vary in how critical they are to the success of the product and creation of competitive advantage. What is inescapable is that ‘partnering’ is crucial. Implicit in partnering is the relationship that is created.

 

Successful partnerships are characterised by a number of key attributes as highlighted in our 2013 Global SRM Research Report ‘Six Pillars for Success’ – openness and transparency; an appetite to improve and innovate; alignment of values and future outlook; frequent collaboration; consistent behaviours; clarity over roles and responsibilities; and communication – to name just a few.

 

Underpinning all these attributes there must be trust. Trust is an emotive term, not always easy to define. In the business world, trust needs to manifest itself in several ways. It must exist at both the individual level and the corporate level. It must also be two ways, with parties needing to be both trustworthy and trusting. It requires commitment, openness and absence of control, which can be difficult to achieve. So while a level of trust is important, the real driver is a shared economic interest. Factors such as mutual dependency and mutual profitability are critical to maintaining the relationship.

 

So what does this tell us about supplier relationship management (SRM)? Many programmes don’t gain organisational traction because they lack a compelling value proposition that provides clarity of objectives for all parties, both internal customer stakeholders and the supplier. The link between business drivers and value described in the SRM report must be tailored to resonate with all stakeholders and provide clarity of objectives. 

 

SRM depends on coherence in its purpose and its methods, and it’s from this that trust will emerge.

 

Call Mel on +44 (0)2078 420 600 or email him at mel.shutes@stateofflux.co.uk to learn more about how you can increase trust in your supplier relationships.