As with most aspects of today’s world, Supplier Relationship Management (SRM) is exhibiting some transformation in most industries, the most important of all being Hospitality. A much greater emphasis on building relationships akin to business deals has become a slow norm. Building these relationships will not only provide better services for guests but also allow reduced costs and workload among other important advantages.
This article will explore and provide tips on how to improve and manage supplier relationships as well as show an in depth view of why and how SRMs work.
What are SRMs?
Supplier Relationship Management refers to a systematic and enterprise-wide approach to assessing a supplier’s strengths and weaknesses, in relation to the overall business strategy. Along with this, the assessment also takes into account the capabilities of the supplier with relation to engaged activities as well as planning and execution.
The main focus of an SRM is to increase the value of interactions between key suppliers and the businesses they provide to. This is done through the development of an effective mutually beneficial relationship with strategic suppliers. SRMs are great at delivering an improved level of innovation and a competitive edge compared to businesses that operate independently or those that use traditional, transaction based purchasing agreements.
What Are The Benefits?
The success of managing these relationships lies in an effective breakdown of said business relationships into digestible process steps. Then use the procurement process as a measure of success based on the ability for the business to deliver on its contractual outcome.
This then is converted into benefits, strengthening the relationship in many different forms such as:
- Reduced Prices
Working in a collaborative manner and being transparent about discussions and business forecasts slims down the need for high costs in the production process or any other part of the supply chain
- Exchanged Information
Effective discussions can arise from these Supplier Relationships. Such as considerations for alternative solutions, inventory management, cost saving measures and cost overviews. All of these and more provide important information in improving performance specifications.
- Exchanged Innovations
Forming strong relationships with suppliers allows businesses to have access to shared innovative developments and other promising market offerings. This can work towards increasing reliability and providing your business with the best that your supplier has to offer.
- Improved Priority
An increase in reputation and relationship between buyers and suppliers creates a sense of importance. Customers that are highly regarded by these suppliers are often given priority when it comes to production availability and may even consider investing in developing their capacity to produce in order to meet the customer’s demand
Where Do You Begin?
Managing a supplier relationship begins with assessing their capabilities to meet your needs on a contractual basis. This includes the measurement of performances during the contractual period and working alongside them to identify any shortcomings and improve a working relationship. This effective communication ensures a healthy sense of contact, allowing the relationship to remain on track for both sides and maximising the benefits of said relationship.
Tips on Improving and Managing Hotel Supplier Relationships
- Adapt and Integrate Technology
Managing supplier relationships becomes easier once both parties are able to have access to effective management technologies. Hospitality businesses that have an eye for both the qualitative and quantitative aspects of their supplier data can easily identify any sore spots, risks and opportunities. This increased visibility into the supplier base is only available through integrating SRM technologies.
- Collaborate and Communicate with Departments
Every aspect of a hotel has the potential to hurt or help the marketing and loyalty of customers. The increase in accessibility for social media means that reviews can reach an audience bigger than just your local area. As such, it is important that those involved in procurement are able to work closely with the marketing and customer relations department.
- Centralize and Control Purchases
For any SRM to work effectively, a department needs to retain an appropriate level of control over the processes that they oversee. Having this standard guide in place when it comes to building and creating relationships reduces any unwanted redundancies and creates a simpler way to go about the contractual process. Payment problems can arise if one or more departments decide to create their own contract with a third party supplier.