October 11, 2022 • 14 mins
Supply relationship management (SRM) and its contributions to a company's long-term growth is perhaps the most discussed topic in the sourcing and procurement circles today. We do not exaggerate when we say that without a proper SRM plan in place, you may even face business continuity risk.
In this episode of our #PGC podcast, join Kevin Giblin, the head of strategic sourcing at Fitch Group, for an enriching conversation on today's Supplier Relationship Management landscape, its promises, and challenges.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:06):
(00:32):
Welcome to the procurement game changers, the podcastfor leaders that make a difference.
Today, we'll be talking about the importanceof supplier relationship management in procurement.
And to discuss this topic, I have the pleasureto receive Kevin Giblin.
Kevin is the head of strategic sourcing atFitch Group, Inc.
Fitch Group is a global leader in financialinformation services with operations in more
(00:57):
than 30 countries.
Kevin is a 2017 epic award winner for excellencein procurement.
He has more than 27 years of experience inthe procurement industry.
Welcome to the show, Kevin.
Thanks, Hélène.
Thanks for having me.
I look forward to having a chat today.
Wonderful.
So Kevin, could you tell us what led you toprocurement?
(01:19):
Yeah, Interesting story.
Probably many people have the same type ofpath to procurement where starting out doing
something else.
Let's remember that the word "sourcing" didn'teven exist in most dictionaries until the
90s and procurement as a function was typicallyhandled by business persons themselves kind
of doing it along with their daily chores.
(01:41):
So I remember earlier in my career, I hadbeen in a small company and I was in the facilities
department, also asked to handle, record storage,and then, oh, by the way, that led to, you
know, purchase some things too, that the companyneeds.
There was a company shift, an acquisition.
And then I was asked by my new manager whocame from GE, he worked on [with] Jack Welsh.
(02:05):
So that's actually a pretty good mentor, formy career.
He said (02:08):
" you're doing facilities, records management and purchasing pick one."
And that was the extent of the conversation.
Pick one.
And I said, I'll pick purchasing.
And he said, wise choice.
And so here I am, I was at a conference, yearsand years ago, even before that, there was
about 300 attendees in that seminar.
And the speaker said, how many of you startedyour career in procurement?
(02:31):
And nobody raised their hand.
[He] Said how many people were doing somethingelse well, and then you were asked to take
on procurement?
And almost everyone raised their hand.
So my story is probably not unique, but there'show I got my story.
No, absolutely.
And I can share that I didn't start my careerin procurement either.
So yeah, here you go.
So today we're gonna talk about supplier relationshipmanagement.
(02:53):
And, so supplier relationship management isa process to continuously measure and improve
the relationship with suppliers starting withtheir actual performance.
So SRM as we often say, is associated withvarious SaaS platform, but the approach is
much wider and can yield tremendous benefits.
So why is supplier relationship managementso important, in your opinion?
(03:17):
Why is it important?
Well, I think, let's take the question theopposite way.
What would happen if you don't have a supplierrelationship?
And so I think that's the better questionto ask, but why is it important?
Because I think what's really important is: this is someone who's providing a product (03:28):
undefined
and, or service [to] your organization.
Without them, you have business continuityrisk.
So you want to make sure that you build arelationship with them.
So it's not just about the contract SLAs [Service-LevelAgreement], it's not just about the quarterly
business we use.
It's about what can that supplier also doto help be more innovative and help us be
(03:52):
more innovative as a company.
And so it's building the trust, building thatadvisory type of a role from your supplier
relationships.
That's goes way beyond how did you do againstthe KPIs?
So SRM is often associated with tools andsystems.
But it's a bit like, you know, the CRM inthat if you limit your transformation to the
(04:15):
tool, then it can very quickly fade and actuallydoesn't stick.
So is that something that in your experienceis true as well with SRM?
Yeah, a hundred percent.
I think there's an old adage that if you havea broken process, the only thing that a tool
will do is facilitate visibility to that brokenprocess.
(04:36):
So I think you can have an effective procurementorganization without tools.
You can have effective sourcing organizationwithout tools, and you can have effective
SRM without the tools.
Can they help compliment what you put in place?
Yes, but I think if you don't have the rightinfrastructure and program in place, the tools
will not help.
I have a different version of that adage Ihave: "if you digitalize a shitty process,
(04:58):
you just have a digitalized shitty process."
I can say (05:01):
"Pardon of my French."
Right.
I can say that.
I give you the cleaned up version, right?
So why do you think some companies are neglectingtheir supplier relationships?
I think it's because they have a misconceptionabout what supplier relationship is.
You know, I mentioned earlier a lot of companieshave this notion that it's about making sure
(05:26):
that the supplier met their SLAs.
And if they don't, just yell at them and kickand scream.
If that's the only thing you do with supplierrelationships then you're missing the point
of what it's all about.
Similarly, you know, it's a subset of theprocurement family, right?
So similarly there's a big misconception aboutwhat strategic sourcing is versus procurement.
(05:49):
It's the same thing, right?
No, it's not.
If someone wanted to buy a pen and they wentto procurement, procurement would go to the
catalog, say (05:58):
"how many do you need?", make the transaction and you'll have your pen shortly.
But if you had the same question to sourcing,[they would] say: "Well, what do you need
the pen for?
Are there other options for you?
Do you want it to be recycled instrument?
Do you want it to be from a diversity andinclusion supplier?
And why are you getting a pen in the firstplace?
Can't you use your computer to write?"
(06:19):
So, so we asked all those questions.
Same thing with supplier relationship management.
It's not just about the performance.
It's about how is that supplier's long termviability.
Can they be a partner to us, maybe in otherareas that they're not working with us today
on?
So it's a more big-picture, holistic approach.
No, I agree.
(06:40):
And I've heard in other industries in particularI worked in healthcare as a consultant and
they we're working on co-development withtheir suppliers.
And that goes into what you were saying [it]can go just beyond just a relationship and
a performance.
Sometimes the relationship you develop, it'smuch more than a client-supplier relationship.
(07:03):
So that's why it's very important.
And, but how do you build and manage thosesupplier relationships?
And can you give us some kind of practicalexamples of how it could look like?
Yeah, I think you can't do [this] with everysupplier, obviously, because that's where
that segmentation approach comes into play,where you look at your critical strategic
(07:23):
suppliers.
I'll give you an example of a supplier thaton the surface, you wouldn't think this would
fall into that strategic high important category.
However, it became that way.
We looked at our office suppliers relationshipand said: we can do it much more with this.
Now, at the time, we spent quite a bit onoffice supplies and the markets change.
(07:46):
But having this relationship, we ended updoing things with the environmental initiatives
[that] were really important.
We reduced the number of the dollars per order,which lowered the number of deliveries, which
reduced the carbon footprint.
So there was that benefit, but then therewere things beyond that where the supply would
come to us and say, Hey, we had a customerin Iowa, for example, that they retrofitted
(08:11):
all their warehouse lighting and they savedmillions of dollars.
Now, you would think about that and say, whydoes that matter for an office supplies company?
What's in it for them?
The answer was nothing from a revenue standpoint.
But it builds that trusted relationship that,Hey, we found something out that you might
benefit from.
So we wanna share that with you.
And so when we started talking about the benefitsbeyond that, what would be the benefits from
(08:36):
having best in class supplier relationships?
Well, the best in class benefits of havingthat kind of supplier relationship is you
know, things that help your company's brand.
You know, we partnered with a number of keysuppliers.
Say, Hey, we want to be in the top 100 greenor environmentally from the us companies.
(08:56):
And so we put together this road show, broughtin some key suppliers and said, we want to
be in this together.
And lo and behold, we ended up being fromnot even on the radar to the top 25 in the
span of two years.
Yeah.
That's very good point.
So what would be the challenges then?
(09:16):
Challenges is getting buy-in from the businessto participate because it's not a per se savings
initiative.
It's not necessarily an efficiency initiative,but it is a brand impact initiative.
And whether you're a public or private companythat has a significant impact on your stakeholder
viewpoint of the organization.
Is there a risk of having too much intimacywith your suppliers?
(09:40):
Yeah, of course, because you run the riskof having a dependency on them that they become
not a single source, but a sole source.
And you kind of paint yourself into the corner.
You don't wanna be in that position.
So what do you think about supplier enabledinnovation and supplier awards?
Is that something that you work with?
(10:01):
Yeah, I do.
I like that a lot.
I can give you an example.
There was a supplier who [had us] visitingtheir warehouse.
They actually had plaques up on the wall supplierof the year, 2012, 2013, 2015.
Now customer visitors say what happened in2014?
(10:23):
And so that means we did something wrong thatyear.
We want to go back and earn the trust so wecan get that award back on a wall.
So there's a motivation factor there.
Yeah.
And to a point previously, when you want todo co-development or get some ideas from your
suppliers that see all the clients and seein the same industry, sometimes that can give
you some ideas on how to improve either yourprocesses or the way you manage your suppliers.
(10:49):
All of this is also part of that.
It's not only project related.
It can be also in the process, in the wayyou engage with the supplier.
There's so much to learn from each other,actually.
Yeah, exactly.
So does SRM apply in your view to all categories?
Of course, I'm gonna go back to my own little,you know, chapel, as you say.
(11:11):
Professional services and consulting in particular,it's a weird category, I would say.
But do you think that whatever you said beforeon supplier relationship management applies
to those categories?
I think it can apply to any category, butmaybe it's addressed a little bit differently.
You know, obviously if it's a product supplier,there's one side of it.
(11:34):
If it's a service supplier, there's a totallydifferent side.
The margin's a different, there are differentlines of business.
They impact the business in a different way,but I think there's always ways to create
this collaborative innovation partnership,no matter.
Yeah.
I think that you have a point in saying youaddress it differently.
(11:57):
In my experience, in consulting, in particular,the business lines are much more involved
in the process of procurement and thereforethey probably also are or should be in the
supplier relationship management.
So it has to have some, you know, balancebetween what the business lines do, what the
procurement does and how you make that, youknow, make sense.
(12:18):
I agree.
The stakeholder involvement for sure.
The communication across functions.
Yeah.
And you said that before collaboration withthe suppliers, but then you have also all
the collaboration internally with your stakeholder.
This is a big topic.
This is another, this is, that could be anotherpodcast, another topic in itself.
So now it's the time for the takeaway.
(12:42):
So what is the one thing that you would likeour audience to remember from our conversation?
I think you want to think of SRMs by the relationshipmanagement, the same way that you would want
the business stakeholders of you, procurement.
It's much more than you think on the surfaceand you need to invest the time and effort.
(13:02):
And if you do, there's benefits to the program.
Oh, wonderful.
Thank you, Kevin.
Thank you for your time.
I know it's a topic that's close to your heart,so I hope that you were able to really say
it and describe it as you wanted.
I hope that our audience will also be veryinterested in SRM now and in the future.
(13:23):
Thank you.
Thank you.
A pleasure.
Thanks for having me.
Bye now.
So now it's your turn to tell us about yourexperience and your challenges with supplier
relationship management in the comment section.
Don't forget to subscribe.
If you want to be notified when a new episodeis out.
Thank you for listening, and I hope you enjoyedthis episode.
And if that's the case, don't forget to givethis a thumb up.
(13:46):
So happy sourcing to you all bye.
Au Revoir.
(00:32):
Welcome to the procurement game changers, the podcastfor leaders that make a difference.
Today, we'll be talking about the importanceof supplier relationship management in procurement.
And to discuss this topic, I have the pleasureto receive Kevin Giblin.
Kevin is the head of strategic sourcing atFitch Group, Inc.
Fitch Group is a global leader in financialinformation services with operations in more
(00:57):
than 30 countries.
Kevin is a 2017 epic award winner for excellencein procurement.
He has more than 27 years of experience inthe procurement industry.
Welcome to the show, Kevin.
Thanks, Hélène.
Thanks for having me.
I look forward to having a chat today.
Wonderful.
So Kevin, could you tell us what led you toprocurement?
(01:19):
Yeah, Interesting story.
Probably many people have the same type ofpath to procurement where starting out doing
something else.
Let's remember that the word "sourcing" didn'teven exist in most dictionaries until the
90s and procurement as a function was typicallyhandled by business persons themselves kind
of doing it along with their daily chores.
(01:41):
So I remember earlier in my career, I hadbeen in a small company and I was in the facilities
department, also asked to handle, record storage,and then, oh, by the way, that led to, you
know, purchase some things too, that the companyneeds.
There was a company shift, an acquisition.
And then I was asked by my new manager whocame from GE, he worked on [with] Jack Welsh.
(02:05):
So that's actually a pretty good mentor, formy career.
He said (02:08):
" you're doing facilities, records management and purchasing pick one."
And that was the extent of the conversation.
Pick one.
And I said, I'll pick purchasing.
And he said, wise choice.
And so here I am, I was at a conference, yearsand years ago, even before that, there was
about 300 attendees in that seminar.
And the speaker said, how many of you startedyour career in procurement?
(02:31):
And nobody raised their hand.
[He] Said how many people were doing somethingelse well, and then you were asked to take
on procurement?
And almost everyone raised their hand.
So my story is probably not unique, but there'show I got my story.
No, absolutely.
And I can share that I didn't start my careerin procurement either.
So yeah, here you go.
So today we're gonna talk about supplier relationshipmanagement.
(02:53):
And, so supplier relationship management isa process to continuously measure and improve
the relationship with suppliers starting withtheir actual performance.
So SRM as we often say, is associated withvarious SaaS platform, but the approach is
much wider and can yield tremendous benefits.
So why is supplier relationship managementso important, in your opinion?
(03:17):
Why is it important?
Well, I think, let's take the question theopposite way.
What would happen if you don't have a supplierrelationship?
And so I think that's the better questionto ask, but why is it important?
Because I think what's really important is: this is someone who's providing a product (03:28):
undefined
and, or service [to] your organization.
Without them, you have business continuityrisk.
So you want to make sure that you build arelationship with them.
So it's not just about the contract SLAs [Service-LevelAgreement], it's not just about the quarterly
business we use.
It's about what can that supplier also doto help be more innovative and help us be
(03:52):
more innovative as a company.
And so it's building the trust, building thatadvisory type of a role from your supplier
relationships.
That's goes way beyond how did you do againstthe KPIs?
So SRM is often associated with tools andsystems.
But it's a bit like, you know, the CRM inthat if you limit your transformation to the
(04:15):
tool, then it can very quickly fade and actuallydoesn't stick.
So is that something that in your experienceis true as well with SRM?
Yeah, a hundred percent.
I think there's an old adage that if you havea broken process, the only thing that a tool
will do is facilitate visibility to that brokenprocess.
(04:36):
So I think you can have an effective procurementorganization without tools.
You can have effective sourcing organizationwithout tools, and you can have effective
SRM without the tools.
Can they help compliment what you put in place?
Yes, but I think if you don't have the rightinfrastructure and program in place, the tools
will not help.
I have a different version of that adage Ihave: "if you digitalize a shitty process,
(04:58):
you just have a digitalized shitty process."
I can say (05:01):
"Pardon of my French."
Right.
I can say that.
I give you the cleaned up version, right?
So why do you think some companies are neglectingtheir supplier relationships?
I think it's because they have a misconceptionabout what supplier relationship is.
You know, I mentioned earlier a lot of companieshave this notion that it's about making sure
(05:26):
that the supplier met their SLAs.
And if they don't, just yell at them and kickand scream.
If that's the only thing you do with supplierrelationships then you're missing the point
of what it's all about.
Similarly, you know, it's a subset of theprocurement family, right?
So similarly there's a big misconception aboutwhat strategic sourcing is versus procurement.
(05:49):
It's the same thing, right?
No, it's not.
If someone wanted to buy a pen and they wentto procurement, procurement would go to the
catalog, say (05:58):
"how many do you need?", make the transaction and you'll have your pen shortly.
But if you had the same question to sourcing,[they would] say: "Well, what do you need
the pen for?
Are there other options for you?
Do you want it to be recycled instrument?
Do you want it to be from a diversity andinclusion supplier?
And why are you getting a pen in the firstplace?
Can't you use your computer to write?"
(06:19):
So, so we asked all those questions.
Same thing with supplier relationship management.
It's not just about the performance.
It's about how is that supplier's long termviability.
Can they be a partner to us, maybe in otherareas that they're not working with us today
on?
So it's a more big-picture, holistic approach.
No, I agree.
(06:40):
And I've heard in other industries in particularI worked in healthcare as a consultant and
they we're working on co-development withtheir suppliers.
And that goes into what you were saying [it]can go just beyond just a relationship and
a performance.
Sometimes the relationship you develop, it'smuch more than a client-supplier relationship.
(07:03):
So that's why it's very important.
And, but how do you build and manage thosesupplier relationships?
And can you give us some kind of practicalexamples of how it could look like?
Yeah, I think you can't do [this] with everysupplier, obviously, because that's where
that segmentation approach comes into play,where you look at your critical strategic
(07:23):
suppliers.
I'll give you an example of a supplier thaton the surface, you wouldn't think this would
fall into that strategic high important category.
However, it became that way.
We looked at our office suppliers relationshipand said: we can do it much more with this.
Now, at the time, we spent quite a bit onoffice supplies and the markets change.
(07:46):
But having this relationship, we ended updoing things with the environmental initiatives
[that] were really important.
We reduced the number of the dollars per order,which lowered the number of deliveries, which
reduced the carbon footprint.
So there was that benefit, but then therewere things beyond that where the supply would
come to us and say, Hey, we had a customerin Iowa, for example, that they retrofitted
(08:11):
all their warehouse lighting and they savedmillions of dollars.
Now, you would think about that and say, whydoes that matter for an office supplies company?
What's in it for them?
The answer was nothing from a revenue standpoint.
But it builds that trusted relationship that,Hey, we found something out that you might
benefit from.
So we wanna share that with you.
And so when we started talking about the benefitsbeyond that, what would be the benefits from
(08:36):
having best in class supplier relationships?
Well, the best in class benefits of havingthat kind of supplier relationship is you
know, things that help your company's brand.
You know, we partnered with a number of keysuppliers.
Say, Hey, we want to be in the top 100 greenor environmentally from the us companies.
(08:56):
And so we put together this road show, broughtin some key suppliers and said, we want to
be in this together.
And lo and behold, we ended up being fromnot even on the radar to the top 25 in the
span of two years.
Yeah.
That's very good point.
So what would be the challenges then?
(09:16):
Challenges is getting buy-in from the businessto participate because it's not a per se savings
initiative.
It's not necessarily an efficiency initiative,but it is a brand impact initiative.
And whether you're a public or private companythat has a significant impact on your stakeholder
viewpoint of the organization.
Is there a risk of having too much intimacywith your suppliers?
(09:40):
Yeah, of course, because you run the riskof having a dependency on them that they become
not a single source, but a sole source.
And you kind of paint yourself into the corner.
You don't wanna be in that position.
So what do you think about supplier enabledinnovation and supplier awards?
Is that something that you work with?
(10:01):
Yeah, I do.
I like that a lot.
I can give you an example.
There was a supplier who [had us] visitingtheir warehouse.
They actually had plaques up on the wall supplierof the year, 2012, 2013, 2015.
Now customer visitors say what happened in2014?
(10:23):
And so that means we did something wrong thatyear.
We want to go back and earn the trust so wecan get that award back on a wall.
So there's a motivation factor there.
Yeah.
And to a point previously, when you want todo co-development or get some ideas from your
suppliers that see all the clients and seein the same industry, sometimes that can give
you some ideas on how to improve either yourprocesses or the way you manage your suppliers.
(10:49):
All of this is also part of that.
It's not only project related.
It can be also in the process, in the wayyou engage with the supplier.
There's so much to learn from each other,actually.
Yeah, exactly.
So does SRM apply in your view to all categories?
Of course, I'm gonna go back to my own little,you know, chapel, as you say.
(11:11):
Professional services and consulting in particular,it's a weird category, I would say.
But do you think that whatever you said beforeon supplier relationship management applies
to those categories?
I think it can apply to any category, butmaybe it's addressed a little bit differently.
You know, obviously if it's a product supplier,there's one side of it.
(11:34):
If it's a service supplier, there's a totallydifferent side.
The margin's a different, there are differentlines of business.
They impact the business in a different way,but I think there's always ways to create
this collaborative innovation partnership,no matter.
Yeah.
I think that you have a point in saying youaddress it differently.
(11:57):
In my experience, in consulting, in particular,the business lines are much more involved
in the process of procurement and thereforethey probably also are or should be in the
supplier relationship management.
So it has to have some, you know, balancebetween what the business lines do, what the
procurement does and how you make that, youknow, make sense.
(12:18):
I agree.
The stakeholder involvement for sure.
The communication across functions.
Yeah.
And you said that before collaboration withthe suppliers, but then you have also all
the collaboration internally with your stakeholder.
This is a big topic.
This is another, this is, that could be anotherpodcast, another topic in itself.
So now it's the time for the takeaway.
(12:42):
So what is the one thing that you would likeour audience to remember from our conversation?
I think you want to think of SRMs by the relationshipmanagement, the same way that you would want
the business stakeholders of you, procurement.
It's much more than you think on the surfaceand you need to invest the time and effort.
(13:02):
And if you do, there's benefits to the program.
Oh, wonderful.
Thank you, Kevin.
Thank you for your time.
I know it's a topic that's close to your heart,so I hope that you were able to really say
it and describe it as you wanted.
I hope that our audience will also be veryinterested in SRM now and in the future.
(13:23):
Thank you.
Thank you.
A pleasure.
Thanks for having me.
Bye now.
So now it's your turn to tell us about yourexperience and your challenges with supplier
relationship management in the comment section.
Don't forget to subscribe.
If you want to be notified when a new episodeis out.
Thank you for listening, and I hope you enjoyedthis episode.
And if that's the case, don't forget to givethis a thumb up.
(13:46):
So happy sourcing to you all bye.
Au Revoir.
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