SAP Supplier Relationship Management
Press Fact Sheet, June 2003
Supplier relationship management (SRM) is rapidly developing as a key business priority, primarily because it delivers tangible savings, but also because it sets the stage for future collaboration. Business leaders seeking new ways to improve competitiveness have been quick to recognize the potential of SRM to increase profitability while raising customer satisfaction.
In May 2003, SAP introduced a significant upgrade for its SRM solution. SAP Supplier Relationship Management (SAP SRM) now has the ability to operate live auctions, facilitate services procurement, and streamline buyer-supplier interaction through a supplier portal. Existing customers will gain usability enhancements through an adaptive user interface while new customers will appreciate the tight process integration between sourcing and procurement.
SAP SRM also leverages the powerful capabilities of the SAP NetWeaver™ technology platform to facilitate collaboration (enterprise portal), harmonize information (master data management), analyze data (business intelligence), and connect enterprises (exchange infrastructure) with their suppliers.
The Challenge of Relationships
Supplier relationship management calls for a shift in perspective-less emphasis on cost cutting and more emphasis on collaborative scenarios that benefit both buyer and supplier. To succeed in this vein, companies must be able to:
- Analyze global spend by supplier, category, and volume
- Eliminate duplicate contracts for the same supplier or material
- Continuously measure supplier performance for quality and on-time delivery
- Improve the supplier selection and contract negotiation processes
- Involve suppliers at earlier stages during product development
- Make better use of corporate agreements and purchasing volume
Building Blocks of Supplier Relationship Management
These goals demand a solution with the ability to consolidate, analyze, and share information across departmental, corporate, and system boundaries-a solution that can make supplier relationships transparent and deliver clear, real-time information about the supply market on a consistent basis.
- Strategic sourcing with SAP SRM: SAP SRM helps companies save money by consolidating and anticipating supply needs, analyzing historical buying patterns, and tracking market trends. It automates and augments communication-intensive processes such as RFQ and reverse auctions with collaborative tools that facilitate negotiation. In this way, SAP SRM supports the strategic sourcing process and empowers companies to negotiate contracts from a position of strength.
- Operational procurement with SAP SRM: From obtaining planned goods or office supplies to contracting for services or making ad hoc purchases, SAP SRM can streamline purchasing throughout the entire enterprise. A variety of user interfaces cater to the different roles and skills of employees, reducing the need for training and improving user adoption.
- Supplier enablement with SAP SRM: Instead of just relying on price pressure, SAP SRM helps bring trading partners into the fold and involve them in mission-critical business processes. It lets them collaborate on content, orders, notifications, and invoices, and can extend to cover design and inventory collaboration. When buyers and suppliers work together in this way, potential issues are seen sooner, plans can be adjusted on the fly, and confirmations are obtained instantly.
- Content management with SAP SRM: In an ideal world, trading partners would use the same schemas and metadata to identify products and materials. In the real world, even different departments often use incompatible definitions. SAP SRM tackles this by correlating master data from various systems and linking it to a master key, making it possible to identify duplicate parts, redundant suppliers, and overlapping contracts.
Business Benefits of SAP SRM
Supplier relationships have a significant impact on the bottom line, and SAP SRM empowers companies to make that impact a positive one. By covering the entire supply cycle, from strategy to execution, SAP SRM gives companies the power and flexibility needed to build profitable relationships with suppliers of different sizes and capabilities-and boost bottom line results.
- Improved sourcing strategy. SAP SRM helps companies develop and execute critically important sourcing strategies in order to develop the kind of supplier relationships that add significant business value.
- Compressed cycle times. Automated negotiation processes help purchasing professionals quickly select the best supplier for the job at hand, while online approvals and supplier notifications help speed procurement execution.
- Reduced process costs. Process automation alleviates over-burdened purchasing professionals and boosts supplier-related efficiency, while increased compliance enforcement helps minimize instances of maverick buying.
- Lower unit prices. Powerful tools for analysis and negotiation help purchasers make better decisions to balance cost against quality, while integration with backend systems helps companies consolidate demand across multiple business units.
Integration with Other Business Solutions
SAP SRM is designed to work with any supply chain management, product life cycle management, or enterprise resource planning solution, from SAP or any other vendor. Naturally, SAP SRM integrates seamlessly with the SAP Business Suite and all versions of SAP® R/3®. The connections to those solutions are described as follows:
- SAP SRM reduces buffer inventory by integrating with supply chain management systems so that updates made in collaborative planning and inventory management can automatically trigger plan-driven procurement.
- SAP SRM integrates with design and product life-cycle management systems to facilitate supplier selection for engineered goods and materials. This results in accelerated product development cycles.
- Through the ability to connect with corporate finance and enterprise resource planning systems, SAP SRM synchronizes back-office functions such as invoice approval, purchase order creation, and payments.
Summary
SAP SRM covers the entire supply cycle, from strategy to execution, delivering a rapid, measurable return on investment. By optimizing the supply base and improving the value of supplier relationships, SAP SRM helps companies maintain the highest standards for supply quality while significantly cutting the overall cost of goods sold. In other words, SAP SRM delivers real, bottom-line business value that helps companies succeed in a highly competitive, global business environment.
Additional information about SAP SRM can be found at:
http://www.sap.com/solutions/srm/
News
Analyst Reports
- May 2002: Gartner "ERP II Process Manufacturing Magic Quadrant - 2Q02", Y. Genovese, C. Eschinger
- May 2002: META Group "Planning for SRM. Electronic Business Strategies, B. Hudson
- March 2002: Gartner "SAP: Surprisingly transformed but even more confusing", B. Bond
- February 2002 : Gartner ERP II for SRM What is it good for?", D. Hope-Ross, C. Spencer
- July 2001: META Group "The Interdependencies of Sourcing, Procurement, and Supplier Management. Electronic Business Strategies", C. Lehmann
- November 14, 2001: " SAP Markets™ Enterprise Buyer™ (Professional Edition) Propels mySAP? E-Procurement Into Market Leadership
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