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Best practices for supplier relationship management (SRM) vendor selection

Finding the right supplier relationship management (SRM) software for your organization involves vendor research and industry networking. For SRM to work its best, it should match up with all your business requirements.

Choosing the right supplier relationship management (SRM) software is rarely an "either/or" decision. In most cases, it will involve negotiating with numerous SRM vendors about end-to-end procurement, capability for internal process automation, decision enablement and external supplier management.

That said, there are a few specific tips that smart companies use to select the right SRM vendor, based on their unique set of requirements. Here are three.

  1. Ask for a customized product demonstration. Perhaps the most overlooked selection practice is demanding that software vendors respond to specific information requests with more than just a generic request for information (RFI) or product demonstration. A customized demo based on a specific set of business scenarios will provide much more useful and actionable information.

    For example, are you in an environment where supplier content and catalog information and pricing changes on a frequent basis? If so, ask the potential vendor to provide a demonstration of how supplies can update and manage their own information using the vendor's SRM software. Or, inquire how the system can dynamically pull information from a supplier information source.

  2. Network with industry peers and experts. In addition to vendor demonstrations, seek out industry peers, experts and non-profit organizations like the Institute for Supply Management (ISM) or The International Association for Contract and Commercial Management (IACCM). These are all good sources of case studies or challenges that other companies have faced with specific providers and products you're considering. If you have the budget, you can pay a consulting or benchmarking firm (e.g. Hackett Group) to do a product performance comparison analysis.
  3. Understand product overlap. Given how large the SRM universe is, it's essential to understand the critical points of overlap between ERP and other platform providers (e.g., those from SAP, Oracle, Ariba, and Emptoris), and those of niche providers that make ERP and platform capabilities that much stronger. In the case of SAP SRM, for example, working with other third-party software providers in addition to SAP can alleviate many of the shortcomings that would otherwise reduce SAP'S overall showing in comparative solution analyses.

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