Importance of supplier network management in CRM

By Avishek Majumder & Abhinash on June 17, 2019

Customer relationship management is one of the core processes of an organization which deals in establishing, enhancing and maintaining the long term associations with the customers (Chalmeta, 2006). The success of CRM implementation is dependent on its acceptance by several stakeholders and the network between them. Some of the stakeholders involved comprise of:

  • top management
  • retail store agents
  • customers
  • product managers and
  • dealers

The top management helps in enhancing the business reporting so as to provide better governance while customers help in creating value for the company. The product managers facilitate comparison of products so as to reduce the time to market. The main role of dealers is to find and attract more accurate and quality customers. These stakeholders also help in establishing an interpersonal relationship to increase profitability. The function of a stakeholder is also to adapt and develop orders to cater to customer demands (Foong, 2006).

SCOPE model of network management

  • S- Suppliers
  • C- Customers
  • O- Owners
  • P- Partners and
  • E- Employees (Buttle, 2006)

A business network is of more importance in order to expand the business and achieve success. There are various benefits which are achieved by maintaining a proper network with stakeholders (Chalmeta, 2006). The foremost is related to opportunities, as the motivated business owner will bring an abundance of opportunities which in turn will provide a path for the extension. Second is related to the trust as long term relations are based on trust which in turn fosters employee satisfaction. Loyalty also helps in maintaining strong relationships with the employees by providing a high quality of services. Through this, the customers will tend to pay more as the products will hold high regard (Chalmeta, 2006).

In the network of any organization, there exist four factors which include suppliers, owners, employees and partners (Buttle, 2006). The customers are considered as the heart of all the other four factors surrounding them. Customer is the internal factor and others are external as they are working towards the common goal that is the satisfaction of the customers. People within the business have a formal relationship but they share an informal relationship with the outside one who is not oriented towards the task.

Different types of network and their importance in CRM success

There are two networks within which businesses operate that are supplier network and the distribution network. The supplier network has been explained by taking the example of Toyota. It can be determined that the organization widely relies upon various suppliers for its manufacturing. These are considered as tier one suppliers (Buttle, 2006). Tier one suppliers have their own CRM systems so as to manage the coordination with the manufacturers. They also need to keep a proper relationship with Tier two suppliers. Lateral coordination is also required between the suppliers at all tiers. The suppliers need to be influenced until tier three in case of the competing suppliers.

The distribution network is the interconnected group which stores the inventories of goods and then delivers it to the end customers. It also explains various characteristics of a business network. The companies in this network focus on bringing competencies, styles of management, relationship, and resources. Managing proper network will enable in fulfilling the customers demand easily (Buttle, 2006). The main role of it is to automate the sales processes and the flow of information.

Challenges faced while managing networks of businesses

CRM helps in delivering a valuable and desirable proportion of satisfaction to the customers but there are challenges related to the CRM networks such as:

  • It is difficult for a business to design the business network from scratch in cases of businesses that have been newly established (Shirazi and Mortazavi, 2009).
  • Maintaining a good relationship is a challenge in the initial stages of the business operation which results in difficulties of meeting customer demands (Foong, 2006).
  • Customer information may change frequently but it’s difficult for data makers to reach customers easily.
  • Privacy is one of the biggest concerns which are faced by both the networks as the marketing of multichannel does not work in protected societies.

Strategies for managing the networks of businesses

Businesses make sure that regular or reliable communications remain maintained with all the suppliers and distributors to maintain accuracy and reliability (Bahari and Elayidom, 2015).

For instance, a business dealing with sustainable products and services needs its suppliers and distributors to follow the same sustainable structure.

Businesses use CRM tools to gather data and construct a seamless communication with not just the customers but also its network members. With the help of effective communications, the external members of the business network are able to build a stronger relationship with the consumers.

Managing networks is not an easy task; it requires proper knowledge and expertise in analyzing and identifying network related issues (Bahari and Elayidom, 2015). Businesses use the CRM tools to evaluate the efficiency of the network with respect to the involvement of all the members and their commitment to perform the required activities required.

To deliver valuable services, it is necessary to identify various business activities performed by the members. In case of discrepancies in the network, these should be rectified immediately to avoid delay (Bahari and Elayidom, 2015). Therefore, businesses use CRM tools to identify the respective activities and their management for suppliers, distributors, franchisees, contractors or business partners. Businesses also use the tools to identify the respective business activities and plan action of distribution of tasks.


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