I interviewed Romesh Gupta who discussed Supplier Relationship Management.
Can you provide a brief background of yourself?
Yeah, Dustin. The pleasure is all mine. My background is in mechanical engineering. And I started in supply chain back in 1999 with automobile manufacturing. I was working with Tata Motors. I started my career as a developmental engineer moving into operations, new product introduction. Then after, I worked in several industries in supply chain, like Sea Logistics, Michael Manufacturing, trading, MEP Contracting.
So, basically, I have a broad-based experience and exposure in different industries of supply chain.
Can you talk about the critical flows in supply chain?
Yeah, Dustin. Supply chain, at the end of the day, is all about the three critical flows, which is you have to move your goods and services to your end customers, you have the manage the information flow, and then, if you manage these two flows well, then automatically the cash flows are good. So, my three-month contract for supply chain is efficient flow of goods and services, good flow of information in the entire chain, from customers customer to supplier supplier, and efficient cash flow.
Can you talk about why is SRM so critical today and the key drivers for managing?
I would like to give a little bit of background about supplier relationship and its relationship with supply chain. This subject is not given too much prominence in industry, because normally, when we are dealing with suppliers, we take them for granted. But today I would like to say that investing in this relationship is critical if you want to improve profitability and drive growth. Some of the key factors which are leading us to invest in this relationship is our product life cycles are getting shorter and shorter, which means our time to market is less. So, unless you invest in your supplier relationship, with will be late to the market.
There are several industries which are fully reliant on suppliers. And good relationship is a differentiator in the market.
The second point is innovation and disruption. In modern times, innovation is very fast. And it's costly for an organization to develop all the capabilities in house. So, it's common sense that you should invest in your supply. You should always reach out to the suppliers who are having the best technology so that you can integrate their technology and their know-how, and you can be a better innovator in the marketplace.
The third point is, of course, globalization. Our supply chains are getting longer and longer, thanks information technology, which has shortened the barrier between suppliers and us. So, it becomes imperative for us to invest in this relationship and reach out to the suppliers. And it doesn't necessarily mean that [inaudible 00:03:53] supplier. We should also reach out to our suppliers also, because that makes your chain stronger, and you have better visibility also.
What are some of the key things that you can do for supplier relationship management?
I would like to say that it's very... We can focus on three Vs of supply chain, because that will make it simple and easy for people to understand. The three Vs are visibility, velocity, and variability. So, we should make of our relationship with our supplier so that our processes are more visible. For example, we can try to have integration of our operations with our supplier, which means we can share our strategic plan, demand plan, our new product introduction. So the better integration we have with our suppliers, the better response we will get from them.
Second would be our across functional collaboration. If we can collaborate with our suppliers and use their capabilities, we can create more value for our products and services. I can site from my own personal and professional experience. We were developing our light commission [inaudible 00:05:26] application on light commercial rep, and our time to market was very short. We had to market this product in three months. At that point in time, we brought in the supplier who was with us in the market study and then in the prototyping stage. And the supplier was with us up to the testing and launch of the product, and the product was very successful.
And to me, one of the main factors why we were successful was we had cross-functional relationship with the supplier.
A third point I would like to highlight is traditionally in supply chain, they're talking about sales and operations planning where we saying that we should have internal collaboration and integration. What I would like to take it forward. If companies can integrate up backward with their suppliers, in their sales and operations planning, I think we can it [inaudible 00:06:29] and it can improve the bottom line of the [inaudible 00:06:34].
Why should you invest in SRM?
The reason why we should invest in SRM is first of all, I would like to clarify that. We should not consider SRM as any software. Rather we should consider SRM as, instead, a tool to elevate the strength of our suppliers. So, the better the [inaudible 00:07:05] and the relationship we have with the supplier, we will have more resources at our command, at the lower price point, at a lower cost point. And then we can use those capabilities and resources to face our customers and face the [inaudible 00:07:24].
Can you talk about where you've seen some success?
I would like to say we're talking about ERT and information tools, which are at our command. And we are mostly focusing on using these tools forward in the chain of trying to integrate with our customers or customer's customer.
But I see a lot of value in having these tools even integrated backwards with our suppliers, which to my experience and knowledge, we have not explored it to the fullest potential. And if we can do that, I think, as I have mentioned in the beginning, the information flow smooths out, and that will facilitate the movement of goods and services in the chain. So, I think one of the key things we can look forward to is having our [inaudible 00:08:31] systems integrated with our suppliers.
About Romesh Gupta
Romesh Gupta, BE,CSCP,SCOR-P
Head of Supply Chain|UAE|Oman