Welcome to Day X of Acme Manufacturing’s SRM (Supplier Relationship Management) workshop, where you will tackle two practical, real-world challenges designed to solidify your understanding of foundational SRM principles and partner-driven innovation:

1. Case 1: Building a Supplier Measurement Toolkit
   In this exercise, you step into the Procurement Strategy Execution team’s shoes to create Acme’s Baseline Tracking framework. You’ll define and standardize key metrics—Operational Performance, Quality Performance, Financial & Compliance Health, and Risk Indicators—for all active suppliers. By designing data sources, cadence, thresholds, and a prototype dashboard, you’ll ensure that Acme “knows its suppliers” and can detect early warning signals. Your deliverable: a comprehensive Supplier Measurement Toolkit that provides real-time visibility into supplier health and empowers data-driven decisions.
2. Case 2: Launching a Co-Development Project with a Strategic Supplier
   Now that the baseline is in place, shift focus to innovation. As a member of Acme’s SRM & Innovation team, you will partner with ElectroMotion Inc.—a top-tier Strategic supplier—to co-develop an IoT-enabled bearing sensor (“Smart Bearing”). Starting from Acme’s 2025–2028 corporate strategy (innovation, margin, sustainability, resilience), you’ll craft a project charter, governance structure, RACI model, and phased roadmap. You will also outline a Joint Business Plan that aligns budgets, IP ownership, and shared milestones. Your deliverable: a clear plan to launch a successful partner-program project that drives new revenue streams.

Together, these two cases illustrate how developing robust supplier metrics and then applying SRM to co-innovationform the dual foundation of a mature SRM capability. Use the background materials, cross-functional team profiles, and data inputs provided to drive collaborative discussions, make thoughtful decisions, and experience firsthand how SRM transforms suppliers into strategic partners.

Case 1: Building a Supplier Measurement Toolkit

You are a member of Acme Manufacturing’s Procurement Strategy Execution team. With SRM now formally in place, your first priority is to establish Baseline Tracking—the foundational layer of Supplier Relationship Management (SRM). Your mission is to design a Supplier Measurement Toolkit (“Know Your Supplier” process) (Delivery Performance) that will enable Acme to monitor, benchmark, and improve performance across its entire supplier base. This toolkit will form the basis for automated scorecards, risk alerts, and informed decision making in subsequent SRM layers.

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Background & Reading Material (15 min)

Over the past 18 months, Acme has grown from a regional industrial manufacturer into a pan‐European OEM supplier, with three production sites (Västerås, Malmö, Esbjerg) and a total of 450 active suppliers. In 2024, Procurement restructured to include four Category Managers, each responsible for a strategic spend category. Acme’s Senior Leadership mandated that before diving into high‐level SRM (Joint Business Plans, continuous improvement), the procurement function must first “know its suppliers.” This means gathering and standardizing basic but critical metrics for all suppliers so that the organization has a single source of truth on supplier performance, risk, and compliance.

1. Current State of Supplier Data

• ERP/Purchasing System: Contains transactional data (purchase orders, receipts, invoices) for all suppliers. However, it is poorly standardized: multiple supplier codes, inconsistent part‐number mapping, and manual data cleansing are required before any reporting can be trusted.
• Quality Management System (QMS): Tracks non‐conformance reports (NCRs), corrective action plans (CAPAs), and basic audit results (pass/fail). Currently, about 75% of supplier quality data is entered manually by Quality Engineers, leading to delays and occasional omissions.
• Finance/Accounts Payable: Houses supplier financial health indicators. There is no formal integration between Finance and Procurement to share supplier credit ratings or early‐warning signals.
• Compliance Records: A small SharePoint folder contains signed Supplier Codes of Conduct, certificates (ISO 9001, ISO 14001, CE markings), and occasional sustainability/self‐assessment questionnaires. These are not indexed or searchable, making it difficult to verify code‐of‐conduct adherence at scale.

In summary, while Acme has pockets of supplier information, it lacks a centralized, structured repository for key metrics that can be refreshed on a regular cadence. This fragmentation prevents Procurement and Category teams from identifying underperforming suppliers quickly, monitoring risk in real time, or deploying early corrective actions.

2. Scope of Baseline Tracking Toolkit

Procurement’s leadership has defined four primary dimensions for the Supplier Measurement Toolkit—each corresponding to basic “Know Your Supplier” requirements. For each dimension, you must determine which metrics to capture, how frequently to update them, and where (which system or dashboard) they will reside:

1. Operational Performance
   • On-Time Delivery (OTD) %: Percentage of orders delivered to the agreed date or earlier.
   • Fill‐Rate (Shipment Completeness) %: Percentage of line items shipped complete, without backorders.
   • Lead-Time Variability: Standard deviation of actual lead-time vs. requested lead-time (measured monthly).
2. Quality Performance
   • Defect Rate (% of Defective Units): Number of non‐conforming units (per 10 000 units delivered).
   • Corrective Action Closure Time (Avg Days): Time from NCR creation to CAPA* closure.
   • Audit Pass/Fail Status: Result of the last scheduled audit (pass = 0, minor findings = 1, major findings = 2).
3. Financial & Compliance Health
   • Credit Rating / Financial Health Score: (e.g., from Dun & Bradstreet or local credit bureau—on a 1–100 scale).
   • Code of Conduct Compliance %: Percentage of current active suppliers with a signed Code of Conduct on file.
   • ESG Self-Assessment Completion %: Percentage of suppliers who have submitted the yearly sustainability questionnaire (alternative using external assessment tools example Ecovadis).
4. Risk & Strategic Alignment Indicators
   • Supply-Risk Category: Low/Medium/High based on geographic concentration, single‐source dependency, and historical disruptions.
   • Kraljic Quadrant Assignment: Strategic, Leverage, Bottleneck, or Non-Critical based on spend and risk.
   • Innovation/Collaboration Score: A qualitative rating (e.g., 1–5) indicating supplier’s willingness and capability to co-develop new products.

These metrics serve as the “minimum viable data set” for all active suppliers. By standardizing these across three sites and five major categories (Direct Materials, Indirect MRO, Packaging, IT Services, Facility Services), Procurement can achieve the following baseline goals:

• Visibility: Real-time dashboards show top 50 suppliers by critical dimension (e.g., lowest OTD, highest defect rate, poorest credit score).
• Benchmarking: Category Managers can compare similar suppliers (e.g., two bearing suppliers) on both cost and performance.
• Risk Alerts: If any supplier’s key metric crosses a predefined threshold (e.g., Defect Rate > 1.5%), an automated notification is sent to the Procurement Manager and Quality Engineer.
• Data Integration: Over the next six months, the toolkit must integrate ERP, QMS, and Finance data—feeding a central SRM dashboard (e.g., Power BI or a legacy portal).

3. Organizational Context & Stakeholders

Your cross-functional “Baseline Toolkit” working group comprises:

• Procurement Lead (You): Accountable for finalizing metric definitions, data governance, and dashboard design.
• Quality Engineer (Johan): Responsible for supplying QMS data (defect rates, NCRs, audit statuses) and defining quality thresholds.
• Finance Analyst (Elin): Provides DPO and credit ratings, and recommends how often financial health should be refreshed (e.g., quarterly vs. monthly).
• IT Systems Analyst (Sofia): Manages ERP and data-warehouse integration, ensures connectivity to the SRM dashboard tool.
• Category Manager (Anna): Advises on Kraljic assignment logic and innovation scores for key suppliers.

Collectively, the team has a clear mandate:

“Within six weeks, deliver a set of standardized metrics, data sources, update schedules, and a prototype dashboard for Baseline Supplier Tracking—enabling Acme to immediately ‘know its suppliers’ and detect early warning signals.”

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Task & Discussion Questions

Phase 1: Designing the Metric Set (30 min)

1. Finalize Metric Definitions & Formulas
   • For each of the four dimensions (Operational, Quality, Financial & Compliance, Risk & Strategic Alignment), agree on:
     • Metric Name (e.g., On-Time Delivery %).
     • Calculation Method (e.g., OTD = # orders delivered on or before requested date ÷ total orders × 100).
     • Data Source & Owner (e.g., ERP system, QA QMS, Finance reports).
     • Update Cadence (Monthly for OTD, real-time for NCRs, quarterly for credit rating).
2. Determine Thresholds for Alerts
   • Propose “Red/Yellow/Green” thresholds for each metric (for example: OTD > 95 % = Green; 90–95 % = Yellow; < 90 % = Red).
   • Specify who should receive immediate notifications when a metric is “Red” and what initial action should be taken (e.g., Procurement Lead and Category Manager to schedule a root-cause meeting).
3. Outline Data Integration Requirements
   • Identify potential challenges (e.g., inconsistent supplier codes, missing data fields) and propose solutions (e.g., data cleansing rules, mandatory supplier part-number mapping).
   • Define raw data tables or API endpoints that IT can use to pull data into the central SRM dashboard.

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Class Debrief & Reflection (30–40 min)

• Group Presentations (≈ 5 min per group):
  Each team presents their finalized metric set, threshold proposals, and dashboard sketches. Highlight any assumptions made (e.g., missing data fields) and how you addressed them.
• Compare & Contrast:
  Discuss differences in threshold settings (why one group chose OTD < 88 % as “Red” vs. another’s 90 %) and how those thresholds align with Acme’s production and quality goals.
• Integration Challenges:
  Review common data‐integration hurdles (duplicate supplier codes, mismatched part numbers) and compile best‐practice solutions (e.g., mandatory supplier ID mapping at purchase‐order entry, periodic data audits).

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Key Takeaways

By completing this case, you will have:

• Designed a standardized, cross‐functional Metric Set that covers Operational Performance, Quality, Financial & Compliance Health, and Risk/Strategic Alignment—enabling Acme to “know its suppliers.”
• Clarified Data Ownership & Update Cadence, ensuring that each metric has a clear source, owner, and refresh schedule.
• Sketched a Prototype Dashboard & Reporting Plan, laying the groundwork for automated, near-real-time visibility into supplier health.
• Identified Integration Hurdles & Mitigation Tactics, preparing Acme for a smoother rollout to all suppliers.

Most importantly, you have practiced the Baseline Tracking fundamentals of SRM—setting the stage for higher‐order Supplier Relationship Management activities (Key Supplier Management and Partner Programs) that will follow in subsequent modules. Remember, an effective SRM program is built on solid, reliable data—your Supplier Measurement Toolkit is the first critical step.

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Case 2: Launching a Co-Development Project with a Strategic Supplier

You are part of Acme Manufacturing’s SRM & Innovation team. Acme has identified a Strategic supplier—ElectroMotion Inc.—as the ideal partner to co-develop a new IoT-enabled bearing sensor product. Your mission is to set up and launch this product development project, aligning it with Acme’s strategic goals, SRM partner-program practices, and category strategy for Bearings & Seals.

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Background & Reading Material (15 min)

1. Corporate Strategy & Innovation Mandate

Acme Manufacturing’s 2025–2028 corporate strategy includes:

• Innovation Leadership: Launch at least two new smart-product offerings annually (e.g., IoT-enabled components).
• Margin Improvement: Increase gross margin by 3 percentage points through value-added services.
• Sustainability: Reduce Scope 3 emissions by 15% by 2028 (including sourcing from partners who support energy-efficient practices).

To meet these targets, Acme’s Executive Committee has approved a co-development initiative with ElectroMotion Inc. to design, prototype, and pilot an IoT-enabled bearing sensor (“Smart Bearing”) that can monitor vibration, temperature, and load in real time, transmitting data via a low-power wireless link. This “Smart Bearing” will allow Acme’s OEM customers to implement predictive maintenance solutions, improving uptime and creating a new revenue stream through data-as-a-service.

2. Strategic Supplier Profile: ElectroMotion Inc.

• Location & Facilities: Headquartered in southern Germany, with a dedicated R&D lab specializing in electromechanical sensors and low-power wireless modules. Annual revenue: €120 million.
• Existing Relationship: ElectroMotion has supplied standard electric actuators to Acme for the past four years. Their on-time delivery is 95%, defect rate 0.8%, and they hold ISO 9001, ISO 14001, and CE certification. Acme spent SEK 60 million (≈ €6 million) with ElectroMotion in 2024.
• Innovation Capabilities: In late 2023, ElectroMotion launched a proof-of-concept vibration sensor integration for wind-turbine bearings. They have two PhD-level engineers focusing on MEMS accelerometers and a small software team for edge-analytics algorithms.
• Supply-Risk Profile: Low risk on actuators (substitutable), but embedding electronics into bearings increases technical complexity. Lead-time for sensor modules: 9–12 weeks; critical components (MEMS die) sourced from one fab in Taiwan.
• Partner-Program Status: Classified as “Strategic” in the Kraljic Matrix. Acme’s SRM scorecard shows high innovation potential—ElectroMotion scored 4.5 out of 5 on its “Collaboration & R&D” indicator.

3. As-Is Analyses & Project Preconditions

• Category Strategy Alignment: In a former Case, Bearings & Seals was segmented into:
  • Standard Bearings (Leverage quadrant)Specialized Sealed Bearings (Strategic quadrant)Sensor-Enabled Prototypes (Bottleneck quadrant until now)
  The new “Smart Bearing” sits in a Strategic/Bottleneck intersection—high profit impact if adopted, but high technical risk and complexity.
• Market Trends & Customer Demand:
  • 65% of Acme’s core OEM customers (automotive, wind energy, industrial automation) have expressed interest in remote bearing-health monitoring.
  • Industry reports (Q1 2025) show that the global market for IoT condition-monitoring in rotating equipment is expected to grow at 18% CAGR through 2030.
• Existing Infrastructure & Tools:
  • Acme has deployed Power BI dashboards for SRM baseline metrics (On-Time Delivery, Defect Rate, Compliance).
  • A rudimentary joint-planning portal exists, but it lacks modules for R&D project tracking. Access to shared GitLab repos and Confluence wikis is possible.
• Resource Constraints & Budget:
  • Acme’s R&D budget for FY 2025 allocates SEK 5 million (≈ €450 000) for partner co-development.
  • Timeline: Prototype ready for pilot by Q3 2025; limited to 500 units (beta run) by Q4 2025.

4. Cross-Functional Team Composition

Your co-development team will include:

• You (Project Lead & SRM Coordinator): Oversee project governance, secure budget, and ensure alignment with category strategy.
• ElectroMotion R&D Liaison (Supplier Side): Technical lead for sensor integration and hardware design.
• Acme Mechanical Engineer (Lars Berglund): Defines bearing mechanical tolerances, sealing, and integration with sensor housing.
• Acme Electronics Engineer (Emma Karlsson): Responsible for PCB design, firmware architecture, and data transmission protocols.
• Quality Engineer (Johan Pettersson): Ensures prototype meets IP65 rating, reliability targets, and establishes test protocols.
• IT Systems Analyst (Sofia Nilsson): Configures collaboration tools (GitLab, Confluence, BI dashboards) and data pipelines for real-time pilot monitoring.
• Finance Analyst (Elin Johansson): Tracks project spend, ROI forecasts, and helps define pricing models.

All team members understand basic SRM practices, but this is their first true “Partner Program” project—moving beyond transactional sourcing to co-innovation.

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Task & Discussion Questions

Phase 1: Project Charter & Objectives (15 min)

1. Define Project Vision & Strategic Objectives
   • Draft a clear project vision statement (e.g., “Develop a market-ready IoT-enabled bearing sensor by Q3 2025 that meets cost, quality, and reliability targets and contributes 5% incremental revenue in 2026”).
   • Identify 3–4 strategic objectives that directly support Acme’s corporate targets (Innovation, Margin, Sustainability, Resilience).
2. Align Key Success Metrics
   • Propose 4–5 KPIs for the co-development project (e.g., Prototype Development Cycle Time, Pilot Unit Defect Rate, Cost-per-Unit Target, Data-Uptime %, Supplier Collaboration Score).
   • For each KPI, define target values (e.g., < 10% pilot defect rate, prototype to beta in < 4 months) and how they will be measured (e.g., QA test logs, BI dashboard feeds).
3. Scope & Resource Requirements
   • Sketch the high-level scope—key deliverables (Proof-of-Concept, Alpha Prototype, Beta Batch), major milestones, and out-of-scope items (mass production).
   • Outline a preliminary resource plan—R&D engineer hours, tooling costs, lab test fixtures, data-connect gateway expenses, and a rough budget breakdown.

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Phase 2: Governance & Collaboration Structure 15 min)

1. Design Governance Forums & RACI Model
   • Recommend a governance structure with at least three layers:
     • Executive Steering Committee (ESC): Monthly check-ins with VP of Procurement, VP of R&D, and ElectroMotion’s VP of Sales. Their role is to approve major design pivots, budget re-allocations, and commercial go/no-go decisions.
     • Project Core Team (CT): Weekly or bi-weekly meetings of the cross-functional core team (Acme/ElectroMotion engineers, Quality, Finance, IT) to review technical progress, test results, and risk logs.
     • Technical Working Groups (TWGs): Ad-hoc sub-teams focusing on specific tasks—mechanical packaging, firmware integration, reliability testing.
   • Create a RACI chart mapping every critical activity (e.g., “Select sensor chipset,” “Prototype housing design,” “Regulatory certification”) to Responsible, Accountable, Consulted, and Informed roles.
2. Develop Communication & Collaboration Protocols
   • Propose a collaboration platform setup (e.g., Confluence as knowledge base; GitLab for code/hardware designs; Teams for daily stand-ups).
   • Define document naming conventions and version controls (e.g., “v1.0_20250615_PrototypeSpecs.pdf”).
   • Establish meeting cadences (e.g., ESC monthly; CT weekly; TWGs as needed) and preferred communication channels (e.g., Teams for instant messaging; email summaries for deliverable sign-off).
3. Risk Governance & Escalation Paths
   • Identify top 3–4 project risks (e.g., MEMS** supply disruption, firmware integration delays, regulatory certification hold-ups) and assign each a Risk Owner.
   • Define “Red Flag” thresholds (e.g., if prototype test failure rate exceeds 15% two cycles in a row) that trigger immediate ESC notification.
   • Document the escalation path: “Issue logged → Core Team triage within 48 hours → ESC if not resolved within 1 week.”

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Phase 3: Roadmap & Joint Business Plan (15 min)

1. Create a High-Level Project Roadmap
   • Outline the major phases with timelines and milestones (e.g.,
     • Phase A (Apr–Jun 2025): Concept & Feasibility—mechanical concept, sensor chipset selection, data platform evaluation.
     • Phase B (Jul–Sep 2025): Prototype Development—alpha build, lab testing, firmware validation.
     • Phase C (Oct–Nov 2025): Beta Pilot—build 500 units, field validation at select customer sites.
     • Phase D (Dec 2025–Jan 2026): Final Adjustments & Pre-Production—cost reduction exercises, scalability assessment.
     • Phase E (Feb 2026): Commercial Launch Planning—pricing model finalization, production ramp, marketing collateral.
   • Indicate decision points (Go/No-Go gates) after each phase, with criteria (e.g., “Pass 95% of reliability tests”) for ESC approval.
2. Draft a Joint Business Plan (JBP) Outline
   • Identify mutual objectives (e.g., share-cost funding for R&D lab; split revenue on data services at a 70/30 Acme/ElectroMotion ratio).
   • Include co-investment commitments (e.g., Acme covers 60% of prototype tooling; ElectroMotion invests 100% in firmware development for edge analytics).
   • Set out commercial terms—anticipated sales volume (e.g., 2 000 units in 2026), target unit price (SEK 10 000), margin split, IP ownership (joint IP on sensor design; Acme holds IP on bearing integration).
3. Define Key Deliverables & Exit Criteria
   • Phase A Exit: Feasibility report with mechanical drawings, sensor performance data, and cost-benefit analysis approved by ESC.
   • Phase B Exit: Alpha prototype that meets IP65, dimensional tolerances, and passes 1 000-hour durability test.
   • Phase C Exit: Beta pilot report with customer feedback, < 10% field failure rate, and a plan for any necessary design changes.
   • Phase D Exit: Cost model showing a target unit cost < SEK 7 500 and a production scale-up plan.

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Class Debrief & Reflection (30–40 min)

1. Group Presentations (≈ 5 min per group)
   • Each team presents their Project Charter, Governance & Collaboration Design, and Roadmap/JBP outline. Highlight any trade-offs (e.g., tighter timeline vs. higher cost, risk ownership decisions).
2. Compare Approaches & Rationale
   • Discuss differences in strategic objectives—did some groups emphasize sustainability more? Others focus on margin? How do these choices reflect Acme’s corporate goals?
   • Debate governance cadences—weekly vs. bi-weekly Core Team meetings; what meeting rhythm best balances agility with coordination overhead?
3. Risk Governance & Mitigation
   • Review the Risk Logs: Were key risks (e.g., MEMS supply chain) identified consistently? Did all teams assign clear risk owners?
   • Discuss escalation paths—are “Red Flag” thresholds realistic? Do they give enough time to correct issues before they become showstoppers?
4. Next Steps & Immediate Actions
   • Agree on pilot readiness—what data does IT need to configure the collaboration portal? What prototype kits should Quality prepare?
   • Identify a “Day 1” agenda for the kick-off meeting with ElectroMotion executives (e.g., set final funding commitment, confirm IP review timeline, and schedule the first JBP in 60 days).

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Key Takeaways

• Strategic Alignment: Co-development projects must directly support corporate innovation, margin, sustainability, and resilience goals.
• Structured Governance: Clear, multi-layered governance (ESC, Core Team, TWGs) ensures decisions are made quickly and escalations happen effectively.
• Collaborative Framework: A robust Joint Business Plan (JBP) defines co-investment, IP ownership, revenue sharing, and shared objectives—providing mutual accountability.
• Risk Oversight: Early identification of technical and supply-chain risks (e.g., single-source MEMS components) enables timely mitigation through contingency planning.
• Actionable Roadmap: A phase-based roadmap with well-defined exit criteria and Go/No-Go gates keeps the project on track and aligns both parties on success expectations.

By completing this case, you will have practiced designing a Partner Program for a Strategic supplier—transforming SRM theory into actionable steps that foster co-innovation, manage risk, and drive long-term value. This foundational experience sets the stage for future SRM layers, where continuous improvement and expanding supplier partnerships become second nature.

Note: Illustration to Cases about SRM was created on May 31, 2025 by SORA