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We strongly believe that having a solid foundation of contract and performance management is essential for SRM to be truly effective. While this can be illustrated in several ways, we have chosen to use the following model to reflect both the procurement timeline and the build process that starts with category management and strategic sourcing.
*PROCUREMENT LIFE CYCLE MANAGEMENT
*PROCUREMENT LIFE CYCLE MANAGEMENT “The integrated disciplines of managing all aspects of the procurement lifecycle.” STATE OF FLUX SRM GLOBAL RESEARCH REPORT 2013 *SRM “A discipline of working collaboratively with those suppliers that are vital to the success of the organisation, to build trust and maximise the mutual value of those relationships.” STATE OF FLUX SRM GLOBAL RESEARCH REPORT 2012
NEW VALUE
SRM*
ENHANCE VALUE
PERFORMANCE MANAGEMENT
RENEW RE TENDER EXIT
ASSURE VALUE
CONTRACT MANAGEMENT
SECURE VALUE
RISK MANAGEMENT
CAPTURE VALUE
STRATEGIC SOURCING
IDENTIFY VALUE
CATEGORY MANAGEMENT
PRE AWARD
POST AWARD
These activities do not take place in isolation. Each should inform the next and be built on the previous. For example: › › Category planning and strategic sourcing will identify and capture the potential value for a contract as well as identifying risks. › › Good risk management will take the information from the sourcing activity, and secure the value by creating a contract and business continuity plan that mitigates risks. › › Residual risks will be understood and form part of ongoing risk management. › › The value identified in the sourcing process will be assured when it is embedded in the contract and will inform the ongoing performance management activity. › › The contract remains a live document that is monitored and revisions are agreed as required to meet the changing needs of the business. › › Performance management continuously checks the delivery of the contracted value and has the potential to enhance value through continuous improvement. › › SRM is the selective activity that takes place with a relatively small number of key suppliers to create new value that is not a contractual obligation of either party. › › In addition it is expected that the environment created by SRM will be of enormous benefit to the other activities that make up the management of the procurement lifecycle. It should be expected that if you drill down on any supplier relationship that is being well managed, you will find good evidence of strategic sourcing, risk management, contract and performance management.
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