Strong business partnerships are critical to long-term success, especially for scaling companies building bonds with new vendors. Implementing smart supplier relationship management (SRM) strategies from the start can unlock better payment terms, more reliable deliveries, and competitive advantages over brands vying for supplier attention.
This article goes over the role SRM and supplier management software plays in the procurement cycle.
What’s supplier relationship management?
SRM is a procurement strategy↗ focused on building strong, collaborative supplier partnerships. The goal is to maximise value, reduce risk, and boost performance.
SRM involves segmenting suppliers based on their strategic importance for your business. It provides a framework for prioritising your most critical suppliers and strengthening these relationships with open communication and trust.
Why is SRM important?
Unlike outdated vendor management systems, which too often centered around transactional oversight, SRM emphasizes long-term value and mutual benefit. It’s a modern procurement solution that helps you:
Mitigate risk by identifying supply-chain vulnerabilities early.
- Enhance communication to foster trust.
- Reduce cost by optimising supplier performance and securing longer invoice deadlines.
- Improve collaboration, leading to better innovation and advantages over competitors.
The supplier relationship management process
SRM provides a structured approach for developing and maintaining supplier partnerships, but it’s flexible. It’s designed to adapt to unique business needs and accommodate growing companies.
Frameworks vary by industry and individual goals, but the basic SRM process typically includes these stages:
- Supplier segmentation.
- Evaluation and selection.
- Performance monitoring.
- Continuous improvement.
Supplier segmentation and selection
Segmentation is about categorising suppliers based on their capabilities and how well they serve your goals. Rank your vendors in order of importance, and prioritise building relationships with those at the top. While this involves subjective reasoning, you still need to be able to access accurate supplier and financial data to support your conclusions.
Leadership and finance teams can rely on Moss to keep precise records. Moss helps you maintain up-to-date supplier data in the platform and align it with your accounting setup, for example by managing supplier settings centrally in Settings > Accounting > Suppliers.
Performance management and continuous improvement
Supplier performance management starts with identifying key performance indicators↗ (KPIs), then monitoring and recording how well suppliers measure up. Common KPIs include:
- On-time deliveries.
- Cost savings.
- Invoice accuracy.
- Quality standards.
- Compliance with contractual terms.
Moss supports the financial and compliance aspects of supplier management by helping you link purchase requests, invoices and budgets, and by flagging inconsistencies—for example when an invoice and its purchase request are assigned to different budgets. Verification workflows also let designated verifiers confirm that invoices match what was delivered and send them back for review if discrepancies are found.
Building a supplier relationship management framework
An SRM framework formalises internal policies, governance models, and collaboration strategies. This structured framework establishes reliable, measurable ways of managing supplier relationships so you can avoid playing catch-up later as your business continues to scale. Here are the main factors.
Governance and communication
You never want to appear disorganised or unreliable to valuable suppliers. Building strong SRM procedures ensures each vendor gets the same message from your company.
By establishing clear communication protocols (there are many best practices that can be taken from Peppol↗ for example) and reporting structures, you’ll strengthen supplier collaboration and internal accountability over time. Regular reviews, feedback loops, and transparent reporting keep you and your key suppliers aligned on mutual goals.
Risk and compliance controls
Mishandled SRM can cause supply disruptions, compliance issues, and reputational risk. Moss’ automated workflows help streamline approval flows and spend controls, reducing manual work and supporting consistent application of your internal policies across the procurement and reporting cycle.
For example, Moss lets you set up customisable budgets with dedicated budget managers who can monitor budget status, receive notifications, and review all transactions assigned to a budget. When an invoice and its purchase request are linked to different budgets, Moss shows a warning to help you avoid double-counting and misaligned budget reporting. These controls help reduce the risk of overspending and improve the accuracy of your spend reporting.
How Moss aids in supplier relationship management
Moss isn’t an SRM platform, but it plays a vital role in streamlining and scaling procurement operations by:
- Helping you automate purchase requests and approval flows using configurable approval policies.
- Linking purchase requests, invoices and budgets, and warning you when an invoice and its purchase request are assigned to different budgets.
- Providing real-time spend visibility to finance teams and leadership.
- Helping track net-30 deadlines to ensure payments go through on time.
Simply put, Moss complements SRM principles by streamlining procurement processes, which frees up finance teams↗ to focus on strategic supplier relationships rather than repetitive administrative tasks.
Modernise your supplier partnerships
Building bonds with vendors is a key piece in growing SMBs’ success. Creating a solid partnership encourages collaboration, protects brands against supply chain uncertainty, and unlocks potential discounts and invoice extensions.
Moss’ comprehensive spend-management software is here to help. It routes approvals automatically based on your policies, lets you generate purchase orders from approved purchase requests, and helps you match invoices to those requests and due dates, so it’s easier to pay suppliers the correct amounts on time.
Explore Moss’ advanced procurement software↗ today and scale with confidence.
