Supplier relationship management: how to manage supplier relationships effectively

What is supplier relationship management?

Supplier relationship management (SRM) is the ongoing monitoring and evaluation of suppliers that provide your organisation with goods, materials, or services. 

Effective SRM means building and maintaining positive relationships with suppliers through regular communication, collaboration, and shared objectives. It starts during the bidding phase. Poor supplier relationships can increase organisational risk, cause contract mismanagement and even lead to legal disputes.

Benefits of effective supplier relationship management

Strong supplier relationships help procurement professionals deliver value, smooth contract performance and achieve better outcomes.

If carried out effectively SRM can:

• optimise procurement relationships to achieve cost savings 
• reduce risks within your organisation 
• ensure compliance throughout your supply chain 
• foster strong collaboration

For example, a school undertaking a construction project can benefit from proactive supplier management. Early identification of risks, from on-site safety hazards to contractual and financial uncertainties, helps the project run smoothly and reduces the chance of delays.

What are the challenges of supplier relationship management? 

While SRM is crucial, buyers may face several challenges, including: 

• complex global supply chains and corporate structure: as supply chains become increasingly global and complex, managing relationships across multi-tiered suppliers becomes more challenging
• maintaining supplier compliance: staying on top of policies, procedures, technology, etc. is an ongoing process, not a one-off checkbox. It needs to be continued post-award throughout the lifetime of your contract
• technological integration and resource limitations: implementing new technologies for supplier relationship management can be costly and time-consuming

Five tips for successful supplier relationship management

1. Develop strategic partnerships

Treat suppliers as partners, not just service providers. Segment suppliers based on their value and risk to prioritise relationships. 

• low-value, low-risk contracts may only need a transactional approach
• high-value, high-risk contracts benefit from closer collaborative partnerships

2. Manage risks

Identify and assess potential supply chain disruptions, pricing changes, or supplier delays. Implement mitigation strategies to minimise impact.

3. Monitor performance

Establish clear key performance indicators (KPIs) and track supplier performance. Regular evaluation helps to identify improvement opportunities and collaborative problem-solving.

4. Communicate and collaborate

Maintain open dialogue through regular review meetings. Share feedback, and expectations to build trust and accountability.

5. Ensure compliance 

Ensure all procurement activities follow public sector regulations and government policies.

How to run a supplier review meeting 

Review meetings help maintain transparency, address issues proactively, and strengthen supplier relationships. They are vital for effective SRM in the UK public sector.

Five tips for successful supplier review meetings 

1. Plan and prepare 
   • establish a clear agenda focusing on KPIs , delivery updates, challenges, and opportunities
   • review previous meeting notes, data and any relevant contractual commitments
   • share the agenda with the suppliers in advance
2. Set a regular schedule
   • schedule review meetings at consistent intervals to encourage ongoing engagement
   • use calendar invites and reminders to encourage attendance
3. Create a collaborative dialogue
   • use reviews as opportunities for mutual problem-solving rather than just performance reporting
   • be open to supplier feedback expertise and innovations
4. Address issues and risks early
   • identify any delivery or quality concerns early, agree on action points and deadlines to ensure accountability and track improvement
5. Document and follow up
   • record key discussion points, agreed actions, and timelines
   • follow up regularly to track progress on improvement initiatives or corrective actions
   • adapt the relationship as needed based on review outcomes

Help and support

Explore our Procurement Essentials articles to learn more . 

If you are a public and third sector buyer read the latest CCS digital brochure for information,  guidance and full details of our commercial agreements.