6 Immediate Business Improvements Offered by an Online SRM System: Part 3: Other Points to Consider

  • Written By: Sunil Pande
  • Published: October 24 2002

Other Points to Consider

Other points to consider when choosing an online SRM system are:

  • Customization

  • Financial Commitment

  • Speed of Implementation

  • Ability to Integrate with Existing ERP

  • Security

This is Part Three of a three-part article.

Part One presented the supplier relationship activities.

Part Two presented the six immediate business improvements provided by an online SRM system.


Each enterprise conducts its purchasing practices and manages its supplier relationships in different ways. For this reason, it is important to consider an online SRM solution that does not require a one size fits all' mentality. The system should be tailored to meet specific needs specific to the users' requirements. Unlike a packaged SRM solution that is offered as a small part of an enterprise system, vendors that focus on SRM and develop their solutions from the ground up are better equipped to customize their offerings to meet these specific requirements.

Financial commitment

In today's economy, companies are looking for ways to avoid biting off more than they can chew. Once touted as something to avoid, hosted services are now providing a way to reap the benefits of the technology without incurring the IT resources and capital expenses of owning it. A hosted solution from a dedicated online SRM vendor can usually be up and running with a cost of less than $100,000 in the first year.

Speed of implementation

Even with all of the cost savings offered by an online SRM solution, if the implementation takes months or even years to complete (as is often the case with ERP or internally hosted packages), the return on investment will be less than optimal. Consider the revenues and cost savings lost with each additional implementation day. Focused online SRM vendors are able to shorten the implementation time considerably some are able to do it in less than three months. And some can implement the solution in a staged manner — allowing users to harvest increased revenues and reduced costs without having to wait years for the complete solution.

Ability to integrate with existing ERP

It should be the intent of an Online SRM solution to enhance an existing enterprise system rather than to replace it. An Online SRM system that has been designed from the ground up has a higher likelihood of being more compatible with many different enterprise systems than one that was built as an extension of an existing system.

Data needs to be easily exchanged between the ERP and the online SRM system. Some online SRM systems offer both manual and automatic import/export capabilities with the ability to program downloads to perform at specified times, as defined by the system administrator. This ensures a reliable, constant flow of data between the online SRM system and the ERP. Effective data exchanges eliminate time consuming and error-prone manual data entry and offers true enhancement to the enterprise system.


Security should be a concern when sharing any kind of internal data with outside parties. To maintain security with an internally hosted application, a firewall must be created to block outside users from private company data. These firewalls are effective, however in the case of Internet-based procurement, a separate firewall must be created for each supplier. This can be costly and labor-intensive.

This is another advantage of a hosted solution. Because all communications take place at one central location outside both the buyer and the supplier's corporate firewalls, multiple-site security devices are not required. A good online SRM provider will use a reputable, secure facility that aims to maintain data integrity and a best-of-breed security infrastructure assembled from leading edge technologies proven to be the most secure for each function. It will also provide security devices that are sourced from leading Internet security providers, configured by expert professionals, and rigorously tested before being placed into production. This not only simplifies the process, but it ensures that the data remains secure.


Maintaining an effective supply chain is clearly an integral part of a manufacturing company's livelihood. Using Web-enabled tools, the enterprise is able to transform the procurement function of its supply chain from a cost center to a powerful business unit. By reducing manual processes and providing valuable analytics to enable strategic decisions, an effective online SRM solution is one of the most effective ways to achieve these results.

About the Author

Sunil Pande, with over 20 years of experience in the high tech industry, is a co-founder and President of Entomo, Inc. He has conceived, developed and brought to market integrated Supply Chain/ERP products for "to-order" manufacturing, an Offline Transaction Processing (OFTP) product, network management, and videoconferencing products. Mr. Pande holds a MS in Computer Science from the University of Oregon and a BS/MS in Computer Engineering from BITS, Pilani, India.

About Entomo, Inc.

Entomo, Inc. offers Online SRM and strategic sourcing applications that electronically link manufacturers with their direct materials supply chain. Its Web-based application, Entomo SmartHub/SRM, delivers transaction automation, online collaboration, exception management, supplier performance measurement, and supply chain analytics. Advanced capabilities support aggregation of inventory and purchasing data from multiple sites delivering cross-plant visibility, consolidated sourcing, centralized commodity management, and inventory sharing. For additional information, please visit www.entomo.com or call 1.877.936.8666.

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