How to Build an Effective Supplier Relationship Management Program

A procurement organisation cannot manage every supplier with the same level of attention.

Some suppliers provide standard products in competitive markets. Others control critical technology, affect production continuity or contribute directly to innovation and customer value. Applying the same meetings, scorecards and relationship activities to every supplier wastes resources and may leave the most important relationships under-managed.

Supplier Relationship Management, usually abbreviated to SRM, provides a structured way to decide:

• Which suppliers require additional management attention.
• What the organisation wants to achieve from each relationship.
• Who should participate in the relationship.
• Which performance measures should be used.
• How issues and opportunities should be governed.
• When a closer supplier relationship is no longer justified.

Effective SRM is not about being friendly with suppliers. It is about applying the right management model to the right supplier for a clear business reason.

LHTS procurement framework

Primary role: Management
Supporting role: Tactical
Procurement process: Supplier management
Learning level: Advanced
Related course: Supplier Management

Quick answer: What is Supplier Relationship Management?

Supplier Relationship Management is the structured management of interactions between a buying organisation and its suppliers.

It includes supplier performance, governance, risk, communication, development and collaboration. The amount of time and commitment invested in a relationship should depend on the importance, risk and potential contribution of the supplier.

All active suppliers need an appropriate level of supplier management. Only selected suppliers justify an intensive SRM programme.

CIPS describes SRM as the management and maintenance of the relationship between a buyer and a supplier. It also emphasises that the appropriate type of relationship depends on the criticality of the goods or services being supplied.

Supplier Management versus Supplier Relationship Management

The terms Supplier Management and Supplier Relationship Management are often used differently between organisations.

For the purpose of the LHTS procurement framework, the following distinction is useful.

Supplier Management is the broad process used to manage the supplier base after suppliers have been selected (in sourcing events). It includes activities such as:

• Supplier onboarding.
• Contract implementation.
• Performance measurement.
• Risk and compliance monitoring.
• Corrective actions.
• Supplier development.
• Contract renewal.
• Resourcing or supplier exit.

Supplier Relationship Management is the differentiated way the organisation manages its interactions with selected suppliers according to value, risk, dependency and strategic potential.

This means that supplier performance management is part of SRM, but it is not the complete discipline.

A monthly delivery report is supplier management. A cross-functional programme that combines delivery performance, capacity planning, cost improvement, innovation and executive governance is a more developed form of SRM.

The difference is therefore not simply a question of terminology. It is a question of management intensity.

Every supplier needs an appropriate baseline. Only some suppliers justify dedicated relationship managers, executive sponsors, joint business plans or collaborative innovation programmes.

Where SRM fits in the procurement process

SRM connects the sourcing and contracting process to the results delivered after contract award.

Category management defines the direction

The category strategy explains what the organisation needs from its supply market.

It may define objectives concerning:

• Cost.
• Supply continuity.
• Standardisation.
• Innovation.
• Sustainability.
• Capacity.
• Technology access.
• Supplier-base consolidation.
• Geographic diversification.

The supplier relationship should support those category objectives.

A supplier should not be labelled strategic merely because it is large, well-known or preferred by senior stakeholders. The relationship must contribute to a defined business and category strategy.

The sourcing process selects the supplier

During sourcing, the procurement team:

• Defines requirements.
• Analyses the market.
• Identifies potential suppliers.
• Evaluates proposals.
• Negotiates commercial conditions.
• Selects a supplier.
• Signs the contract.

The sourcing process determines which supplier receives the business. SRM determines how the organisation will work with that supplier after selection.

Contract management establishes the obligations

The contract should define the supplier’s commitments concerning price, quality, delivery, service, compliance, reporting and improvement.

SRM should not replace the contract. It should provide the governance needed to manage the contract and realise the intended commercial result.

A strong relationship is not an alternative to clear contractual terms.

Supplier management delivers the result

After implementation, the supplier must deliver against the agreement.

This is where the organisation measures performance, manages risks, resolves issues and identifies opportunities for improvement.

The relationship continues until the organisation decides to:

• Renew the contract.
• Change the scope.
• Renegotiate the commercial model.
• Develop the supplier.
• Reduce dependency.
• Resource the requirement.
• End the relationship.

SRM therefore covers both relationship development and relationship exit.

Why suppliers need different relationship models

Supplier relationships require resources from both parties.

Meetings, data collection, action plans, executive reviews, workshops and development programmes all consume time. They should only be introduced when their expected value justifies the effort.

CIPS describes a relationship spectrum ranging from low-commitment transactional relationships to highly collaborative relationships with selected strategic suppliers. It notes that the strongest forms of collaboration require significant time and resources and should therefore be reserved for appropriate high-risk or high-value relationships.

The objective is not to move every supplier towards partnership.

The objective is to choose the most suitable relationship.

For one supplier, the correct model may be efficient ordering supported by automated performance alerts. For another, it may be a formal continuity plan. For a third, it may be joint product development and executive sponsorship.

A mature procurement organisation is comfortable using different models simultaneously.

Using the Kraljic Matrix as an SRM input

The Kraljic purchasing portfolio provides a useful starting point for determining the purchasing strategy.

Peter Kraljic’s original model considered two main dimensions:

• The strategic importance or profit impact of the purchase.
• The complexity or risk of the supply market.

The purpose was to help management select an appropriate supply strategy and balance purchasing power with supply risk.

The resulting purchasing situations are commonly described as:

• Non-critical or routine.
• Leverage.
• Bottleneck.
• Strategic.

The matrix can help identify where procurement resources may be needed, but it should not be used as the only supplier-relationship segmentation tool.

The original model primarily evaluates the purchasing situation, product, service or category. SRM also needs to assess the individual supplier and the relationship.

Additional segmentation factors may include:

• Current supplier performance.
• Switching cost.
• Availability of alternatives.
• Buyer dependency on the supplier.
• Supplier dependency on the buyer.
• Access to unique technology.
• Capacity constraints.
• Innovation potential.
• Financial or operational risk.
• Cultural and strategic fit.
• Willingness to invest in the relationship.
• Opportunity for mutual value creation.

A strategic category does not automatically produce a strategic partnership.

The supplier must have the right capability, and both parties must see value in investing in the relationship.

The three levels of the LHTS SRM model

The LHTS Supplier Management course introduces three levels of engagement. The course is designed to help procurement professionals differentiate their supplier approach and select a suitable relationship model.

The three levels can be developed into a practical SRM operating model.

Level 1: Baseline supplier management

Purpose

Baseline supplier management establishes the minimum control required for the active supplier base.

It allows the procurement organisation to detect deviations without introducing unnecessary meetings and administration.

Suitable suppliers

This level normally applies to:

• Routine suppliers.
• Low-risk suppliers.
• Suppliers providing standard products or services.
• Suppliers with low dependency.
• Suppliers that can be replaced without major disruption.

Some higher-value suppliers may also remain at this level when the market is competitive and the relationship does not justify additional investment.

Typical activities

Baseline activities may include:

• Maintaining correct supplier master data.
• Confirming relevant contracts and purchasing terms.
• Measuring basic delivery, quality and invoice performance.
• Recording complaints and corrective actions.
• Monitoring required compliance documentation.
• Tracking contract expiry dates.
• Using automated alerts when agreed tolerances are exceeded.

Not every supplier needs a recurring performance meeting. For many suppliers, exception-based management is more efficient.

Governance

The operative buyer or designated contract owner may manage the relationship.

Tactical Procurement becomes involved when:

• Performance deteriorates.
• Repeated deviations occur.
• Contractual interpretation is required.
• Commercial renegotiation becomes necessary.
• The supplier’s risk profile changes.

Suitable measures

Measures should reflect the contract and the operational need. Examples may include:

• Delivery on time and in full.
• Defect or complaint rate.
• Invoice accuracy.
• Response time.
• Service availability.
• Completion of required compliance documents.

Performance thresholds should be defined for the specific category and contract. A generic target should not be copied across the entire supplier base.

Level 2: Key supplier management

Purpose

Key supplier management focuses additional resources on suppliers that have a material effect on cost, performance or continuity.

This level often includes suppliers connected to leverage or bottleneck purchasing situations. However, the management objective will differ between those situations.

Leverage supplier objective

A leverage situation usually provides the buyer with alternatives and commercial purchasing power.

The relationship may focus on:

• Cost transparency.
• Volume consolidation.
• Demand planning.
• Productivity improvement.
• Specification optimisation.
• Benchmarking.
• Competitive pricing.
• Process efficiency.

A leverage supplier can be important without becoming a strategic partner.

Procurement should maintain competition and commercial discipline even when the supplier performs well.

Bottleneck supplier objective

A bottleneck situation may represent limited spend but high supply risk.

The relationship may focus on:

• Supply continuity.
• Capacity reservation.
• Safety stock.
• Forecast communication.
• Obsolescence planning.
• Technical alternatives.
• Specification changes.
• Dual sourcing.
• Reducing dependency.

Leverage and bottleneck suppliers may sit within the same engagement level, but they should not have identical strategies or scorecards.

Typical activities

Key supplier management may include:

• Formal performance scorecards.
• Scheduled business reviews.
• Corrective-action plans.
• Cost or productivity programmes.
• Capacity and forecast reviews.
• Supplier-risk assessments.
• Continuity plans.
• Contract-improvement plans.
• Cross-functional issue resolution.

Governance

A tactical buyer or category manager normally leads the relationship.

Relevant stakeholders may participate depending on the category:

• Operations.
• Quality.
• Engineering.
• Finance.
• Logistics.
• IT.
• Legal.
• Sustainability.

The governance should be proportionate. A key supplier does not automatically need executive sponsorship.

Level 3: Strategic partner programme

Purpose

A strategic partner programme is used when closer collaboration can produce significant value that cannot be achieved through standard supplier management.

The objective may include:

• Joint innovation.
• Faster product development.
• Access to specialist capability.
• Long-term capacity.
• Supply-chain resilience.
• Joint cost reduction.
• Sustainability improvements.
• Entry into new markets.
• Shared process development.

Entry criteria

A supplier should enter a partner programme only when several conditions are present:

• The supplier is important to the organisation’s strategy.
• The supplier provides capabilities that are difficult to replace.
• There is a credible opportunity for additional value.
• Both parties are willing to commit resources.
• Senior stakeholders support the relationship.
• Appropriate commercial and intellectual-property controls exist.
• The expected value exceeds the management cost and dependency risk.

A high annual spend alone is not sufficient.

Typical activities

A strategic partner programme may include:

• A joint business plan.
• Shared improvement priorities.
• Technology or product roadmaps.
• Joint cost and value engineering.
• Capacity and continuity planning.
• Sustainability initiatives.
• Executive reviews.
• Agreed escalation routes.
• Cross-functional working groups.
• Joint measurement of business outcomes.

Governance

The relationship may be led by a category manager, procurement manager or designated supplier-relationship manager.

Governance often operates at three levels:

1. Operational level: manages current delivery, quality, service and actions.
2. Tactical level: manages improvement plans, capacity, cost, risk and contract development.
3. Strategic level: reviews long-term direction, investments, innovation and executive decisions.

The supplier should have corresponding owners at each level.

Executive sponsors should remove barriers and support decisions. They should not take over the daily management of the supplier.

Back-on-track programmes: An overlay, not a supplier segment

Supplier performance can deteriorate at any engagement level.

A routine supplier, key supplier or strategic partner may require a temporary back-on-track programme.

This should be treated as a corrective overlay rather than a permanent supplier category.

A back-on-track programme should define:

• The performance gap.
• The contractual requirement.
• Immediate containment actions.
• Root-cause analysis.
• Corrective actions.
• Responsible owners.
• Deadlines.
• Evidence required for closure.
• Escalation points.
• Commercial consequences.
• Exit criteria.

The programme ends when the supplier returns to an acceptable and sustainable performance level—or when the buying organisation decides to resource the requirement.

A close relationship must not protect a supplier from accountability.

Practical example: Four suppliers, four approaches

Consider an organisation with the following suppliers.

Supplier A: Standard office supplies

The products are widely available, the annual business impact is limited and switching supplier would be straightforward.

Recommended approach: Level 1 baseline supplier management.

The organisation may use catalogue compliance, order accuracy, delivery performance and invoice accuracy as measures. Formal quarterly reviews would probably add little value.

Supplier B: High-spend packaging supplier

The organisation purchases a high volume, but several qualified alternatives exist.

Recommended approach: Level 2 key supplier management with a leverage objective.

The relationship may focus on:

• Cost development.
• Material optimisation.
• Forecasting.
• Waste reduction.
• Productivity.
• Competitive benchmarking.

The buyer should collaborate where it creates value without unnecessarily reducing competition.

Supplier C: Proprietary maintenance component

Annual spend is relatively low, but failure to receive the component could stop production. Few alternatives are available.

Recommended approach: Level 2 key supplier management with a bottleneck objective.

The relationship should focus on:

• Availability.
• Inventory.
• Lead time.
• Obsolescence.
• Capacity.
• Technical alternatives.
• Contingency plans.

A cost-saving programme should not distract from the primary objective of securing supply.

Supplier D: Product-technology partner

The supplier contributes specialist technology to the organisation’s future products. Replacing the supplier would require extensive redesign and delay product launches.

Recommended approach: Level 3 strategic partner programme.

The relationship may include:

• A joint technology roadmap.
• Executive sponsorship.
• Joint risk and capacity planning.
• Agreed development milestones.
• Intellectual-property governance.
• Cost and value engineering.
• A joint business plan.

The four suppliers are important in different ways. SRM gives the organisation a structured way to apply the right resources and objectives to each relationship.

How to create a useful supplier scorecard

A supplier scorecard should help the organisation make decisions.

It should not become a collection of every available data point.

A balanced scorecard may cover three areas.

1. Contract and operational performance

Examples include:

• Delivery.
• Quality.
• Lead time.
• Service level.
• Responsiveness.
• Invoice accuracy.
• Contract compliance.

2. Risk and continuity

Examples include:

• Capacity.
• Financial risk.
• Business continuity.
• Cybersecurity.
• Regulatory compliance.
• Sub-tier exposure.
• Dependency.
• Required audit actions.

3. Improvement and strategic contribution

Examples include:

• Delivered savings.
• Productivity improvement.
• Innovation milestones.
• Sustainability actions.
• Forecast improvement.
• Product-development support.
• Joint project delivery.

Not every supplier needs measures in all three areas.

The scorecard should match the supplier’s segment, contract and relationship objectives.

Five scorecard rules

A useful scorecard should have:

1. Clear definitions: Both parties understand how each measure is calculated.
2. Reliable data: The source and owner of the data are known.
3. Relevant measures: Each KPI supports a contract or business objective.
4. Supplier influence: The supplier can reasonably affect the result.
5. Agreed actions: Poor performance leads to decisions, owners and deadlines.

Colour-coded dashboards can help the discussion, but colours alone do not manage performance.

Governance: Turn meetings into decisions

SRM often fails because organisations create meeting calendars without defining the purpose of each forum.

Every supplier meeting should answer four questions:

• What decision must be made?
• Which information is required?
• Who has authority to decide?
• Who owns the resulting action?

Operational review

An operational review may cover:

• Recent delivery and quality.
• Open incidents.
• Corrective actions.
• Forecast changes.
• Upcoming deliveries.
• Immediate capacity constraints.

Tactical business review

A tactical review may cover:

• Performance trends.
• Commercial development.
• Improvement projects.
• Contract matters.
• Risk and continuity.
• Capacity planning.
• Cost and productivity.

Strategic review

A strategic review may cover:

• Business direction.
• Technology roadmaps.
• Long-term demand.
• Investments.
• Innovation.
• Sustainability.
• Major risks.
• Development of the relationship.

The meeting cadence should reflect the category, risk, rate of change and quality of current performance.

“Quarterly” should not be selected merely because the meeting is called a quarterly business review. Some relationships require monthly attention; others may only need a structured review twice per year.

For a detailed agenda and joint business plan example, connect this section to the LHTS article Quarterly Business Review and Joint Business Plan.

Joint business planning with strategic suppliers

A joint business plan describes what the buyer and supplier want to achieve together.

It should be reserved for relationships in which both parties are willing and able to commit resources.

A practical joint business plan may include:

• Shared objectives.
• Expected business outcomes.
• Demand and capacity assumptions.
• Cost and productivity initiatives.
• Risk and continuity actions.
• Innovation or technology projects.
• Sustainability objectives.
• Investments required from each party.
• Milestones.
• Performance measures.
• Owners and governance.
• Rules for handling confidential information.
• Review and exit criteria.

The plan should be specific enough to manage.

“Improve collaboration” is not a useful objective.

“Qualify the new material by 30 September, reduce component weight by 8% and achieve the agreed production cost before launch” provides a basis for ownership and measurement.

Joint planning should also recognise that the buyer influences supplier performance. Poor forecasts, late technical decisions, uncontrolled specification changes and delayed approvals can undermine even a capable supplier.

A mature SRM review examines the performance of both parties.

Digital tools that support SRM

Technology can improve SRM, but software does not create a relationship strategy.

Useful digital capabilities may include:

• Supplier master data.
• Contract repositories.
• Supplier portals.
• Performance dashboards.
• Corrective-action workflows.
• Risk alerts.
• Audit-document management.
• Action tracking.
• Collaboration workspaces.
• External supplier intelligence.

The starting point should be the business process.

The organisation should first define:

• Which suppliers require monitoring.
• Which data is needed.
• Who owns the data.
• Which decisions the information supports.
• What happens when a threshold is exceeded.

Only then should it select or configure the system.

External monitoring can support financial, operational, geopolitical and compliance risk management. The LHTS article Modern Supplier Intelligence Tools provides a related next step for organisations developing this capability.

How to implement an SRM programme

A practical implementation can follow seven steps.

Step 1: Define the purpose

Agree why the organisation needs SRM.

Possible objectives include:

• Improving supplier performance.
• Reducing continuity risk.
• Realising more contract value.
• Supporting innovation.
• Improving supplier accountability.
• Strengthening category strategies.
• Managing critical dependencies.

Step 2: Establish ownership

Define:

• The executive sponsor.
• The process owner.
• Category and supplier owners.
• Data owners.
• Meeting owners.
• Escalation responsibilities.
• Cross-functional participants.

Step 3: Segment the suppliers

Use category position, supplier risk, dependency, performance and value potential.

Avoid classifying suppliers based on spend alone.

Step 4: Define the engagement levels

Describe what each level means in your organisation.

Specify:

• Entry criteria.
• Required activities.
• Governance.
• Standard KPIs.
• Roles.
• Review frequency.
• Exit criteria.

Step 5: Build the performance baseline

Start with a limited number of reliable measures.

A simple scorecard with trusted data is more useful than an advanced dashboard that stakeholders do not believe.

Step 6: Pilot the model

Select a manageable number of suppliers.

A pilot can include:

• One routine supplier.
• One leverage supplier.
• One bottleneck supplier.
• One strategic supplier.

This allows the team to test different governance models before scaling the programme.

Step 7: Review the segmentation

Supplier relationships change.

A supplier may become more critical, less competitive, easier to replace or less willing to collaborate.

Review the segmentation when:

• The category strategy changes.
• A new contract is awarded.
• A major performance issue occurs.
• Market conditions change.
• Technology changes.
• A merger or acquisition occurs.
• Dependency increases.
• The business case for collaboration disappears.

SRM should be dynamic rather than a label applied permanently to a supplier.

Common Supplier Relationship Management mistakes

Treating every supplier as strategic

When every supplier is strategic, the term has no practical meaning.

Strategic governance should be limited to relationships that justify the required investment.

Segmenting suppliers only by spend

Low-spend suppliers can create high operational risk. High-spend suppliers may operate in highly competitive markets.

Spend is relevant, but it is not sufficient.

Confusing SRM with supplier performance management

Performance management measures whether the supplier delivers the contract.

SRM also considers governance, risk, development, strategic contribution and the design of the relationship.

Assuming a good personal relationship equals good SRM

Trust and communication are valuable, but SRM requires objectives, data, roles and decisions.

A friendly relationship with poor performance is not successful SRM.

Using the same scorecard for every supplier

Measures should reflect what the supplier provides and why the relationship matters.

An innovation partner and a routine logistics provider should not automatically have identical KPIs.

Holding reviews without decisions

A presentation of historical data is not enough.

Every review should produce decisions, named owners and deadlines.

Collaborating without commercial discipline

Collaboration does not remove the need for contracts, benchmarks, competition, confidentiality and clear responsibilities.

Forcing a partnership that the supplier does not value

A successful strategic relationship requires interest from both parties.

A buyer may consider a supplier strategic while the supplier considers the buyer a small or unattractive account. Supplier preferencing and mutual commitment should therefore be considered.

Allowing strategic status to become permanent

A supplier should remain in a partner programme only while the business case remains valid.

The relationship should be reviewed and, when necessary, moved to another level.

How SRM connects to procurement roles

Primary role: Procurement management

Procurement management owns the operating model.

This may include:

• SRM policy.
• Segmentation principles.
• Governance.
• Resource allocation.
• Executive sponsorship.
• Cross-functional alignment.
• Measurement of programme outcomes.

Supporting role: Tactical procurement

The tactical buyer or category manager applies the model.

Typical responsibilities include:

• Segmenting suppliers.
• Creating scorecards.
• Leading business reviews.
• Managing corrective actions.
• Developing improvement plans.
• Negotiating relationship requirements.
• Coordinating stakeholders.
• Recommending renewal, development or exit.

Supporting role: Operative procurement

The operative buyer provides important day-to-day information.

This may include:

• Order confirmations.
• Delivery deviations.
• Invoice problems.
• Supplier responsiveness.
• Repeated operational issues.
• Changes in lead time.

A good SRM programme connects these roles instead of treating supplier information as separate departmental data.

Related online course: Supplier Management

The Learn How to Source course Supplier Management provides the foundation for differentiated supplier relationships.

The Basic-level course is aimed primarily at the tactical buyer role and introduces:

• The meaning of supplier management.
• How to create a supplier management programme.
• The supplier management toolbox.
• Three levels of engagement.
• How different supplier approaches can improve supplier contribution.

This article develops that foundation into an advanced management model covering segmentation, governance, scorecards, corrective programmes and joint business planning.

Do you want a practical introduction to differentiated supplier management? Take the Learn How to Source course Supplier Management and learn how to select a suitable level of engagement for different suppliers.

Frequently asked questions about SRM

What does SRM mean in procurement?

SRM means Supplier Relationship Management. It is the structured management of buyer-supplier interactions to improve performance, manage risk and realise value from selected supplier relationships.

What is the difference between Supplier Management and SRM?

Supplier Management is the broad process used to manage the supplier base. SRM is the differentiated relationship approach used according to supplier importance, risk, dependency and potential contribution.

Does every supplier need an SRM programme?

Every active supplier needs an appropriate level of management. Only selected suppliers justify intensive activities such as executive sponsorship, joint business planning or collaborative development.

Is supplier performance management part of SRM?

Yes. Supplier performance management is an important part of SRM, but SRM may also include risk management, governance, supplier development, innovation and strategic collaboration.

Which suppliers should be strategic?

Strategic suppliers should be important to the organisation’s business direction, difficult to replace and capable of creating additional value. Both parties must also be willing to invest in the relationship.

Is the Kraljic Matrix a supplier-segmentation tool?

The Kraljic Matrix is primarily a purchasing portfolio and supply-strategy tool. It is a useful input to supplier segmentation, but individual supplier capability, performance, dependency and relationship potential should also be considered.

Can a leverage supplier be important?

Yes. A leverage supplier may represent significant spend and commercial opportunity. However, a high-spend supplier in a competitive market does not automatically require a strategic partnership.

What should a supplier scorecard include?

The scorecard should include a limited number of measures linked to the contract and relationship objectives. Typical areas include delivery, quality, service, cost, risk, compliance and improvement.

How often should supplier reviews be held?

The frequency should depend on risk, performance, category characteristics and the amount of change in the relationship. Monthly, quarterly or twice-yearly reviews may all be appropriate in different situations.

What is a joint business plan?

A joint business plan describes shared buyer-supplier objectives, activities, milestones, responsibilities and performance measures. It is most useful for selected strategic relationships.

Who should own SRM?

Procurement management normally owns the SRM process. Tactical buyers and category managers manage individual relationships with support from operative Procurement and relevant cross-functional stakeholders.

How should SRM value be measured?

SRM value should be measured through business outcomes such as improved performance, lower risk, cost improvement, innovation, working-capital effects, continuity and successful delivery of joint projects.

Conclusion: SRM means applying the right relationship to the right supplier

Supplier Relationship Management should not be treated as a programme for making every supplier relationship closer.

Its purpose is to make supplier management more deliberate.

The main conclusions are:

1. Supplier Management and SRM are closely connected, but they are not identical. Supplier Management covers the broad supplier-management process. SRM determines how the organisation should manage different supplier relationships.
2. Every supplier needs a baseline, but only selected suppliers need intensive governance. The level of engagement should reflect value, risk, dependency and opportunity.
3. The Kraljic Matrix is an input, not the complete answer. Category position should be combined with individual supplier capability, performance, mutual commitment and relationship potential.
4. Leverage, bottleneck and strategic suppliers require different objectives. Commercial improvement, continuity and collaboration should not be mixed into one generic relationship strategy.
5. Scorecards and meetings only create value when they support decisions. Good SRM requires reliable data, clear ownership, actions and escalation.
6. Collaboration must be supported by a business case. A strategic partnership should produce results that cannot be achieved through ordinary contract and performance management.
7. A supplier’s relationship level can change. Segmentation should be reviewed as markets, risks, technology and organisational needs develop.

A useful next step is to select ten current suppliers and ask:

• Why is each supplier important?
• What outcome do we need from the relationship?
• Which engagement level is appropriate?
• Are we investing too much or too little management time?
• Which relationship should be strengthened, simplified or ended?

A mature SRM programme does not try to turn every supplier into a partner.

It ensures that each supplier is managed in the way that best supports the organisation’s objectives.