Governance and Supplier Relationship Management

SRM Case Study of Bristol-Myers Squibb Frances Grote, BMS Supplier relationship management

BMS instituted supplier relationship management in 2005 to work with their suppliers. They grew into a partnerships approach when working with their CROs. The companies needed added value, so they looked at supplier relationship management.

Key to success for supplier relationship management:
-Someone needs to be the driver. A group that is not the direct user of the services, and the ideas need to have a person to implement them, but isn’t’ there to get the job done. It’s a full time commitment, but after it’s in place, doesn’t need full time oversight.
-Senior leadership within business unit. They people who will use it need to buy in. They’re the stake holders and they’ll build your culture.

If someone sits in the suppliers side, that doesn’t mean that they’re another person. If it’s our project, they’re on your team. If you’re improving process, you’ll need to make improvement available to suppliers. If suppliers supply info to other customers, you’re receiving it as well. You all sell what you’ve created to the public, so share and benefit when you can.

If you do SRM well, you could become as important as you are to your suppliers. They’ll want to go back to you, if you have strong SRM, they’ll continue coming back to you. The governance success factors are that you do need committees, as they are key for relationship health but key to keeping internal people. Very strong issue escalation pathways. They need to know who to take it to, someone to hear it, and that’ll help them solve that problem.

Performance management:
- KPIs need to be tied to deliverables
- Deliverables based contracting seems to be key
- KPIs need to be tied to deliverables- Scorecards and KPIs are in place

At BMS, management changes that stayed because of MSAs (before SRM) not service level agreements but expectations about quality, governance. Neither side is up on all, but they’re there. SRM was in the philosophy, and it was more sophisticated. Governance proved to be very powerful. KPIs with metrics and score cards prove the data.