Supplier Relationship Management (SRM) is a systematic way of assessing and identifying suppliers who are crucial to a business and developing strategies to maintain successful relationships with them. It refers to all the business processes and activities that deal with the entire lifecycle of a supplier for an organization and seeks to utilize supplier relationships to gain mutual benefit on the business profits.
It includes various activities such as identification, selection, and management of relevant suppliers by evaluating their performance continually to ensure they are providing maximum value for the organization’s requirements.
Thus, Supplier Relationship Management (SRM) plays an important role in supply chain management because of two primary reasons – to ensure your suppliers are performing well in order for you to achieve maximum value from them and to identify areas of improvement for optimal performance while you engage with suppliers throughout the lifecycle through regular communication and feedback or supplier development programs.