What is an SRM?

November 26, 2018
Guest blogs, Blogs, Testimonials, Best Practice, Learning materials

This guest blog is written by Howard Price. Howard is a Procurement, Supply Chain and Cost Transformation Consulting. To be able to understand the importance of an SRM, I’m going to take you back to a bridge collapse in Genoa…Shortly before noon on August 14th in 2018, a bridge collapsed in the city of Genoa in Italy. This tragedy claimed the lives of 43 people as dozens of cars fell over 150 feet from the Morandi Bridge.

The Morandi bridge in Genoa was a famous landmark renowned for its simplicity. In 1960’s it was a known 3,600-foot, work of art that made its designer, Riccardo Morandi a household name within Engineering and architecture.

Since the incident, the Italian government has suspended the contract with the bridge supplier with the ambition to force the supplier to pay to build a new bridge. But elsewhere, experts say the bridge designer wanted to try a new design concept and that the new concept didn’t work…

However, the ever more alarming fact is that similar bridges around the globe (such as the Morandi Bridge in Venezuela) were modified due to corrosion of the steel within the concrete-encased cable stay.

Whilst there has since been released evidence of what looks like a previously botched refurbishment. The initial refurbishment was made in the late 1990’s, however, Autostrade, which took over the management of the bridge in 1999, failed to carry out any further refurbishment.

The importance of this is that there were clear contractual issues between the government and the supplier. Whilst you can certainly argue about a failure of supplier “performance” for the bridge collapse. In fact, it’s almost certain to emerge that there was more than one failure and many parties are culpable and deserve their share of the blame.

Would a better contract have saved those lives? Or better performance measures? Perhaps, but local people are saying that many years of the negligence of the local infrastructure was ultimately leading to something like this sooner or later.

Whilst the Italian public works have a reputation for corruption (ask any Italian!)..maybe corners were cut and a blind eye turned to regulations.

There is, therefore, something about the wider relationship between the parties, beyond a single contract, beyond simplistic performance measures, something that drills down into the detail of how the various players interacted, that resulted in this awful situation. And that “something”, I suggest, is that there was a Supplier Relationship Management (SRM) failure. Likely, involving several different organisations.

Then, there is the prison debacle today in the UK. The authorities have actually described what has happened as a “failure of contract management”!

The UK Government has stepped in to take emergency control but has already indicated that as soon as possible the prison will be handed back to to the original contractor. The management approach in the prison and the conditions inside the prison were proven to be nothing short of diabolical. The situation was not just Victorian, it was medieval!

Certainly, the “contract” cannot be blamed for this outcome. There was a complete breakdown of the relationships between management and prisoners, between management and prison officers, and between the prison officers themselves and their management and the prisoners, and between the prisoners themselves.

All leading to extreme violence and a situation that could only have made the prisoners becoming increasingly incapable of adapting to an environment outside of prison – exactly the opposite outcome from that a prison is supposed to achieve.

Politically, there is no denying that the outsourcing of prisons to private companies was driven by a desire to reduce costs and transfer responsibilities out of the government domain. However, if enough attention was paid to this process and “corners weren’t cut” it would now be that the key players wouldn’t be under the current level of scrutiny that they are now.

I repeat my description of the situation which I already used above:

“There is, therefore, something about the wider relationship between the parties, beyond a single contract, beyond simplistic performance measures, something that drills down into the detail of how the various players interacted, that resulted in this awful situation. And that, I suggest, is that there was an SRM failure (probably involving several different organisations)”

“There is, therefore, something about the wider relationship between the parties, beyond a single contract, beyond simplistic performance measures, something that drills down into the detail of how the various players interacted, that resulted in this awful situation. And that “something”, I suggest, is that there was a Supplier Relationship Management (SRM) failure. Likely, involving several different organisations.”

Now, by their own admission, the UK Government (and I doubt the Italian Government is any better) has not really implemented any successful Supplier Relationship Management in their procurement processes. And I don’t see any signs of it happening soon!

Nothing I am saying here is of a “party political” biased nature. This is not something that is unique to a particular Government regime. This is a failure to recognise that if you try to manage complex public projects using simplistic contractual approaches, there is a real risk of an eventual human disaster.

End of rant. But you did want to know what SRM was!

Best

Howard

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