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  Manufacturing Insights   |   September, 2007
VRM, Six Sigma, and Automation
by Thomas R. Cutler

Vendor Relationship Management or VRM is the reciprocal of CRM (Customer Relationship Management). VRM provides manufacturing enterprises a wide range of technological tools for efficient vendor interactions that benefit both the manufacturer and the vendor.   In Lynne Hambleton’s new Prentice Hall text Treasure Chest of Six Sigma Growth Methods, Tools, and Best Practices, the author quickly defines that, “A method establishes the foundation for how work gets accomplished.  It defines the who, what, when, where, by and how of a process; wherein a process describes a series of logically sequenced tasks to complete work.” 

VRM can be measured in result-metrics impacting automation.  Hambleton describes a “high-level process and performance metrics define what critical-to-quality is and encompass the critical parameters necessary to meet requirements.  Eventually, these metrics should be translated into a language that is “meaningful” to a process worker involved in providing either the inputs or process deliverables (outputs.)”

VRM improves markets by providing mechanisms that equip automation-based manufacturers to be independent leaders rather than lagging participants in relationships with vendors and other parties on the supply side of the marketplace.   VRM works because vendors have reason to value it, and industrial and distribution organizations have reasons to invest the necessary time, effort, and attention to implementation.

Larry Caretsky, president of Commence Corporation ( suggested, “Until recently, CRM systems took on the full burden of relating with customers and automation functionality was out of the loop. VRM technology provides complex enterprises with the means to take some of the CRM functionality and to help make markets work for both the vendors and customers. The goal of VRM is to improve the relationship between Demand and Supply by providing new and better ways to relate to each other from the product plant floor to satisfaction quantification.”

VRM, a SaaS Solution and a PERT Chart:

A PERT (Program Evaluation and Review Technique) Chart is a tool or technique according to Hambleton which helps to:

  • Plan and manage the timing of activities and overall completion of a project or process.

  • Graphically organize process steps into the most efficient sequence

  • Show the most critical path and any parallel paths with time to completion estimates

  • Evaluate and reorganize the step sequence. It identifies and simultaneous tasks and tasks that will take the longest to complete.

  • Identify any slack time – that is the amount of time a non-critical path task can be delayed without delaying the project

  • Manage resources and understand upstream and downstream dependencies within the process.

  • According to Caretsky, “Commence has adapted all of these principles as a current CRM leader and transformed these principles into a VRM SaaS (software as a service) offering.  Modifying the core CRM product has allowed the company to transfer direct selling organizations into vendor savvy organizations.  Caretsky notes, “VRM is a vital reinterpretation of CRM because the role of interfacing effectively with vendor is increasingly important with a global supply chain.  Tracking and holding vendors accountable is no longer a novel concept in business, rather an essential transactional requirement.”

    Vendor relationship management supports the areas of strategic sourcing and vendor lifecycle management to better prepare operational procurement. It helps an enterprise, whether industrial or retail, to constantly optimize their supplier selection, compress cycle times, and devise sourcing and purchasing strategies.

    Rationale for Rapid Use of VRM

    Extremely rapid adoption of VRM is anticipated because implementation of VRM is anticipated because priced at under $100 per user/vendor per month it provides a method which establishes the foundation for how work gets accomplished as well as the process which describes a series of logically sequenced tasks to complete work.

    Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based TR Cutler, Inc., the largest manufacturing marketing firm worldwide – Cutler is the founder of the Manufacturing Media Consortium of twenty seven hundred journalists and editors writing about trends in manufacturing. Cutler is also the author of the Manufacturers’ Public Relations and Media Guide. Cutler is a frequently published author within the manufacturing sector with more than 300 feature articles authored annually; he can be contacted at See More Details.

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