Supplier Relationship Management at Sun Microsystems: New Strategies & New Technologies Power Innovative Approach
By: Expense Management Solutions Printed in: EMS Newsletter
Like many large and mid-sized organizations, Sun Microsystems found that the number of strategic and outsourced services relationships, and the value at risk in those relationships, had grown significantly as outsourcing evolved as a business strategy.
In most companies, supplier relationships are initially managed independently by the business unit or division that “owns” the relationship, and while the number of relationships is small, this approach can work quite well. But as corporate outsourcing strategies mature, this approach proves inefficient. A company may have multiple relationships with the same supplier, with each side unaware of the successes or challenges experienced in other business units. This disconnect decreases leverage and management effectiveness. Best practices in one division may never be communicated across the corporation, and supplier managers can feel isolated or lack the support they need to effectively perform their duties.
SRM Intiative
In response to these challenges, Sun embarked upon an initiative to develop an innovative, centralized Supplier Relationship Management Program Office (SRM PO). The initiative was driven by the following objectives:
- Retain and/or increase the value of strategic relationships
- Reduce the direct costs of relationship management
- Improve supplier performance
- Increase both customer and supplier satisfaction
- Achieve supplier – client alignment
- Increase the efficiency and effectiveness of relationship management efforts
- Increase supplier managers’ skills and knowledge
- Increase customer satisfaction with internal SRM support
- Utilize new technologies in support of these efforts
Strategy Session
Sun hired Expense Management Solutions to facilitate a one-day strategy session of Sun relationship managers who gathered to discuss the challenge of SRM and propose a series of initiatives to create the SRM PO. During this session, Expense Management Solutions used a proprietary SRM Self-Assessment questionnaire to help the relationship managers develop an awareness of their current SRM practices and identify opportunities for improvement. [An abbreviated – and free – mini assessment may be found on our web site if you click here.] The SRM Self-Assessment measures an organization across five aspects of SRM performance, including SRM Readiness, Supplier Segmentation, Demand Management, Market Intelligence Management, and Performance Management. The resulting report not only illustrates the current level of SRM maturity at a company, but offers actionable guidance on steps which, if taken, will improve performance in all five areas.
By the end of the facilitated strategy session, Sun had identified and prioritized specific initiatives that were considered crucial to the development of the SRM PO at Sun. These initiatives included:
- Develop an SRM community within Sun
- Develop Sun-wide guidelines on SRM, scorecards, SLA development and maintenance, and supplier segmentation
- Centralize SRM information
- Support development of better marketplace intelligence
- Develop a Sun-wide toolkit for SRM support
EMS Selected to Develop and Implement Solution
With these objectives in place, Sun turned to its next challenge. While they had identified the need for specialized expertise, best-in-class processes, and technology to support their SRM program, there was a bigger question of where to find these experts and these tools in the marketplace – if they could be found at all. Most companies and most advisors are still focused on the process of sourcing complex services and have spent far less time developing the sophisticated tools and processes required to effectively manage the complex services contracts that may span multiple services, geographies, currencies and jurisdictions.
Sun developed an RFP for Best in Class SRM. The RFP focused on building a community of practice and included:
- Development of an operations manual
- Establishment of core processes
- Definition of SRM roles and responsibilities
- Development of policies and guidelines
- Implementation of technology to support the SRM PO
Out of eight bids, Sun selected Expense Management Solutions’ proposal to apply our structured and disciplined approach, supported by the Hiperos R.Portal™ technology. Our approach, which is based on our SRM Continuum model, focuses on the same five principles that form the basis of our SRM Self-assessment.
Expense Management Solutions has completed the operations manual and has implemented the Hiperos R.Portal™ platform, which Sun is using to manage a globally integrated corporate real estate services relationship. Five additional relationships, spanning suppliers of wireless telephony, travel, BPO, staffing, and agency are also in place. In addition, the Sun SRM PO itself, is installed as a service provider to their internal customers to facilitate the alignment of SRM PO goals and its customers’ objectives.
Key Takeaways
Carl Avola, Global Category Manager for Sun Microsystems closed the presentation with a few key takeaways. First, he emphasized that the collaborative strategy that Sun employed from the beginning when they planned the first gathering and strategy session for Sun relationship managers enhanced buy-in for this initiative across the enterprise. Second, the establishment of an operations manual and SRM toolkit was a significant influence that helped to streamline implementation and adoption of standard processes. Finally, all of this would have been significantly more difficult, if not impossible, without the use of the Hiperos R.Portal™ platform that supports a portfolio of supplier relationships across geographies, business units, service providers and advisors in real-time.
As Sun proceeds with implementation of this strategy, an infrastructure has been established to integrate best practices as they are identified, to disseminate alerts as they are received, to manage supplier compliance with Sun’s corporate programs and policies, and to increase visibility and insight into important performance metrics and trends as data is collected and recorded over time. With this foundation in place, Sun is positioned to maximize the effectiveness of their outsourcing strategies and strategic relationships and to compete in the challenging business climate ahead.
Additional reading...
Read more about Expense Management Solutions' Compliance Health Check service.
"Great Governance for Outsourced Services: Leveraging New Technology for Breakthrough Performance"
