CRM and SRM

1.Customer Relationship Management

CRM is not a product, not even a suite of products,but a business philosophy that touches upon many independent parts of the organization

To speed customer acquisition, increase customer satisfaction and retention, and the company profit, it is necessary to develop a customer centric business model linking back and front office around the three pillars that are Sales, Marketing and Services.

CRM has mainly three goals:

i. Achieve higher revenues per customer by knowing and serving your customers better.
ii. Increase customer satisfaction and retention by integrating information from multiple channels stored in disparate systems.
iii. Lower costs to acquire and service customers by using technology to automate, manage, and analyze processes and data.

2. Supplier Relationhip Management

Definition of a SRM: “the practices needed to establish the business rules, and the understanding needed for interacting with suppliers of products and services of varied criticality to the profitability of the enterprise”....

SRM as the next generation of e-procurement or more specifically an integrated solution “that bridges product development,sourcing, supply planning, and procurement across the value chain”.

The same 3 pillars, adapted to a procurement perspective:
Marketing
Suppliers services
Purchase

In this case, marketing has to be understood as the mean to attract, filter suppliers, and
promote the company needs.

CRM, SRM needs to support the company-supplier relationship during its entire
lifecycle, meaning:
• Attract new suppliers: in a knowledge economy where goods can be produced anywhere around the world, finding the “best” supplier is becoming a complex task;
• Acquire new suppliers by doing business with them;
• Suppliers retention and development: retaining the best suppliers is the best warranty to
maintain a competitive edge;
• End of relationship by rejection or termination of contract: ending a contract with “bad”
suppliers is a necessary safeguard for the company and understanding why “good” suppliers are leaving is valuable information.
By opposition to CRM, SRM’s goal is to help the company to be a better purchaser by supporting and developing its understanding of suppliers. Some services can help the supplier directly or support its relationship with its own suppliers.

A SRM will therefore help the company gain the following competitive advantages:

1. Increase satisfaction of goods and services purchased and speed up product development by promoting a shared knowledge of suppliers and alternative technologies.
2. Increase supplier’s satisfaction to attract and retain the most competitive ones.
3. Lower prices for purchase and maintenance of goods and services by improving business processes across the supply chain.

Customer service and support:
CRM products are intended to support the company during its post-sale relation with its clients. Their goal is to help provide the best quality and most suited services at the lowest cost.

The SRM is pursuing the same objective, except that it is turned towards the inside (as developed in section 3) to collect and manage the information from all departments.

For example, when a problem is identified on a product - worker on a production line,customer, quality control…- the suppliers repository is updated by the call management unit and the incident is tracked.The procurement officer is automatically informed of the problem and contacts the supplier. The product line is adapted and the product design is perhaps modified to solve the problem. In the future, as the corporation has created a collective memory, this incident can have an impact on the adjudication when selecting a supplier.

Sales vs. Purchase:
The goal of this family of products is to automate the sales force or at least many of its tasks to improve their efficiency and reduce time and cost of sales.

Solutions to support the purchase of products or services are already common. Electronic catalogues, auctioning and electronic request for proposals (RFP) are only the last evolutions in a series of improvement since the 70’s. The SRM solution is the natural evolution of these as it integrates them with the rest of the procurement activities, especially product design and development.

Imagine a system,which could automatically adjudicate purchases for common goods, help prioritize needs and select the adequate purchase method: auction, catalogue, RFP.

Marketing (Marketing automation):
Marketing is at the center of any sales strategy. CRM support to marketing was therefore inevitable. In the contrary, the best warranty for a successful purchase is, for many purchase officers , the number of suppliers in competition. By promoting its needs using marketing techniques (single, multiplechannel campaigns) a company can attract as many suppliers as required. Company directories can also be used, but automated tools to search on the Internet for suppliers are now emerging.

In a CRM, they are primarily turn towards the outside of the company to respond to customer request. In a SRM, to collect information about your suppliers, you mainly search the information within the organization and not outside. SRM support tools are therefore
communicating internally although it can also provide communication channel with the outside to respond to specific suppliers requests concerning warranties,contract negotiation, delivery conditions and any other related question.

5. SRM inablers and inhibitors:
Implementing a SRM business philosophy in a company is not a simple matter especially as
“enterprises are not in the habit of looking to their internal procurement managers as the key to supporting customers”