Glossary
Supplier Relationship Management (SRM)
Supplier Relationship Management is the systematic approach to evaluating, managing, and developing a company’s interactions with its suppliers. It treats suppliers as strategic partners rather than just vendors, with the goal of better pricing, quality, innovation, and supply chain resilience. In supply chain finance, SRM is the framework that makes early payment programmes commercially viable.
What It Is
Not every supplier relationship deserves the same treatment. A company buying office supplies from a catalogue vendor has a fundamentally different relationship than one co-developing proprietary components with a strategic manufacturing partner. SRM provides the framework for recognising those differences and investing accordingly.
Effective SRM rests on four activities: segmenting suppliers by strategic importance, measuring and improving their performance, developing the partnerships that matter most, and managing supplier-related risks before they turn into disruptions.
Supply chain finance is one tool within SRM. Offering suppliers early payment signals that the buyer values the relationship, not just their own cash conversion cycle.
Supplier Segmentation
The core insight of SRM is that suppliers need different levels of engagement depending on how critical they are and how much risk they pose.
Strategic partners: critical to operations, high spend, few alternatives; full programme access, priority onboarding, dedicated relationship manager.
Preferred suppliers: important but replaceable, significant spend; programme access, regular performance reviews.
Approved suppliers: standard transactional, moderate spend; dynamic discounting access, self-service platform.
Commodity suppliers: easily replaceable, low spend; standard payment terms, no priority access.
The SRM Framework
1. Supplier Onboarding
A thorough onboarding process sets up the data, systems, and communication channels needed for an effective relationship. This covers KYC/KYB verification, ERP data setup, supply chain finance enrolment, and platform access.