With a well-planned and well-executed SRM program, utilities can effectively manage issues to achieve superior supplier performance.

Many utilities have not implemented SRM programs to drive costs out of the business and bring value into the utility.

A number of factors can impact the supplier’s ability to provide superior service at lower costs, including:

• The way procurement organizations deal with suppliers
• Cost issues, such as poor inventory management, canceled orders, inconsistent order frequency, poor product specifications and too many change orders
• Services issues, such as late design changes, poorly specified quality assurance requirements or inadequate task specifications

By focusing selectively on suppliers, utilities can expect to benefit from:

• Value-based pricing. Utilities can generate additional productivity benefits from the supply chain beyond reducing price.
• Stronger relationships. Suppliers deliver superior performance and value to companies with which they have strong relationships.
• Collaboration. Value is driven by working with suppliers and building a foundation of communication and trust.
• Time. Given a multiyear commitment, suppliers can justify the resources to invest.

Utilities that make SRM a top priority will be well-positioned to succeed in an environment where structured, disciplined, fact-based decision-making and joint value creation are becoming key differentiators.

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