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Home : Articles : Supplier Relationship Management : SRM Reality

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SRM REALITY

Supplier Relationship Management (SRM) may not have had a strong following a few years ago, but today more businesses are moving toward the implementation of software that helps streamline those connections so that both vendors and buyers can reap the benefits of the technology. In 2001, just under half of companies already had SRM technology in mind for their next project while more than a quarter of businesses planned to implement SRM sometime after 2002.

Even though those numbers seem to suggest that SRM technology isn't growing as quickly or being adopted as widely as analysts once thought, the reality is that the real problem is simply that not enough business decision-makers are even aware that this software exists and do not understand its benefits. Many managers and decision makers claim that had never seen this type of software demonstrated or even used. Most people who have seen SRM in action recognized immediately the benefits such technology could have for their business.

There are many reasons why companies who have witnessed the power of SRM technology are eager to spend the money necessary to get started. One of those reasons is that SRM software does tend to work well with most existing ERP systems and actually helps those systems to achieve their full, promised potential as well. Others who are actively involved in purchasing for major corporations have commented on the structure SRM software brings to the entire sourcing process. After all, instead of dealing with hundreds of separate suppliers alone, the software does most of the work for them.

Besides these benefits, other companies are using SRM software to achieve a number of other advantages. First, the software does help reduce the cycle time on sourcing projects. Instead of going through acres of RFPs and comparing a wide array of quotes, the software actually helps bring all of this together into a simplified selection process. Another way that SRM software cuts down on the time spent on sourcing is that projects can be saved and then reposted later, so if the company's needs are going to be recurring then this can save a great deal of time.

SRM software also makes it easier for companies to select suppliers. One way it does this is by making it easier to compare the different prices quickly. Additionally, the software allows buyers to figure in the past performance of vendors into the equation. For example, it may be tempting to choose Vendor C on the basis of its lower price to deliver raw materials but since the last shipment Vendor C sent was of bad quality materials that had to mostly be scrapped, the buyer may want to change his or her mind.

The technology also makes communication between the buyer and seller faster. Since the transfer of information can be done in real-time, the vendor can check the buyer's inventory to determine whether new shipments are needed and the buyer can instantly submit orders over the Internet without reducing his overall productivity. Likewise, questions related to orders can be answered by checking in on the details via the Internet so no human interaction or human-related delays have to interfere with the work. Another benefit is that SRM software makes it easier to standardize purchasing decisions. Most companies have no clear idea of why they choose which suppliers to work with, but with this software thinking about those factors becomes more important and readily apparent.

Unfortunately, even though the benefits are real for businesses that use SRM software effectively, not everything can be expected to run smoothly. Getting suppliers to join the party and setting realistic expectations related to return on investments are some major obstacles to the technology's success. However once those problems are overcome, and they can be overcome with good strategies and implementation, companies can begin to streamline some of the most important relationships their business maintains.

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