Energetica India - June 2020

Overcoming Key Challenges for A Healthy and Strategic Supplier Relationship Management Most organisations though still focus primarily on cost-cutting initiatives when it comes to SRM. SRM should, in fact, be driven by the ‘value’ that both the companies bring on the table by their partnership. A proper value mapping can enable the organisations to focus on reduction of risk and development of market ready products, thereby becoming more competitive in the marketplace. Transparency and agility are the key to sustaining long term business relationships. For companies in the energy space it is more important to develop and maintain these connections to ensure operational efficiency. In today’s VUCA (volatile, uncertain, complex and ambiguous) world, companies must make the optimal use of resources and relationships to have a competitive advantage in the market. Strategic sourcing has reached a saturation point where it is now evident that the returns are ‘diminishing’. Nearly, all ‘low-hanging fruits’ have been picked and so, extracting value through aggregation and bidding is now becoming increasingly difficult. Now more than ever, procurement has taken center stage and companies have identified the importance of Supplier Rela- tionship Management (SRM). Most organisations though still focus primarily on cost-cutting initiatives when it comes to SRM. SRM should, in fact, be driv- en by the ‘value’ that both the companies bring on the table by their partnership. A proper value mapping can enable the organisations to focus on reduction of risk and development of market ready products, thereby becoming more competitive in the marketplace. Today, though technology has played a worthy catalyst in evolving SRM, there are a few challenges to overcome. Challenges in building relationship with suppliers Though there is an increased awareness on having an effec- tive SRM for the betterment of the business, many companies struggle to keep up as it requires a change in mindset. To be - gin with, a lack of executive sponsorship is what hampers the relationship building with suppliers. When the top executives take responsibility, it helps align SRM strategy with corporate objectives and at the same time ensures resource allocation along with focus-driven and solution-oriented operations. The second hurdle is that of business case which, in a manner of speaking, helps build a temperament for the procurement. This in turn enables the buyer to track and trace progress, which is important from the point of view of maintaining a healthy bal- ance sheet for the company. A structured and strong supplier relationship management strategy extracts the best value for everyone. Managing risks through SRM Every business is riddled with risks at any given point in time. Risk management across operational areas, therefore, be- comes an important function in an organisations. Since dis - ruptions in the supply chain domain can massively impact a company’s growth and affect profits, managing risks becomes vital for an effective SRM. In such a scenario, following a risk analysis involving both the buyer and their preferred suppliers would help overcome the challenge. An open dialogue between the two will help build a comprehensive approach, which is essential to douse fires and solve issues that hamper effective functioning of supply chain. Furthermore, deploying advanced capabilities will re- duce vulnerability and exposure to high-impact supply disruptions. 56 energetica INDIA- June_2020 A.S. Kumar VP – Purchase, Fortum India Pvt. Ltd. RENEWABLE BUSINESS MANAGEMENT