Supplier relationship management (SRM) is a comprehensive approach towards managing an enterprise's interactions with the organizations that supply the goods and services it uses. SRM manages the flow of information between suppliers and purchasing organizations and ensures the integration of supplier information in the procurement process by the buyer. The goal of SRM is to streamline processes regarding the acquisition of products and services, by replacing inefficient paper trails and letting it take advantage of price breaks in company-wide supplier contracts. Ultimately SRM can make more effective the processes between an enterprise and its suppliers.
Meanwhile, supply chain management (SCM) is the management of the entire value-added chain, from the end user to the supplier to the manufacturer, right through to the retailer and the final customer. SCM involves coordinating and integrating the flow of: (1) the product, (2) the information and (3) the finances, both within and among companies. The ultimate goal is to reduce inventory, increase the transaction speed by exchanging data in real-time, and increase sales by implementing customer requirements more efficiently.
SAP's SRM solution integrates with the SCM solution at different process levels. One example is the integration of APO (a component of the SCM solution) with SRM.
For example, in the Direct Material Scenario with Planning in SAP APO: If we do not wish to start the procurement process for direct materials manually in the SRM system, then we can plan such requirements in an external planning system (eg. APO). These requirements can then be sourced automatically in Enterprise Buyer (a component of SRM) via negotiated sources of supply. As soon as Enterprise Buyer has created a purchase order for the requirements, it notifies the planning system (APO). For a complete integration review the SRM business maps available on service marketplace.
This was first published in February 2006