SRM involves sourcing and procurement. The procurement cycle begins with sourcing - identifying, evaluating, and negotiating with the optimal group of suppliers. SRM software solutions automate the process of creating, distributing, and evaluating bids, conducting auctions and maintaining supplier report cards. Cost-effective procurement requires reach, speed, and control. SRM solutions must ensure that the process is controlled, keeping maverick or off-contract spending in check and staying within budgetary limits. Procurement leverages the success of the purchasing department in contract negotiation and establishing policies across the enterprise.

The best SRM applications are based on a highly configurable, web-based framework which helps integrate strategic practices for supplier qualification, negotiation, and contract management more tightly and cost-effectively with other enterprise functions. and their suppliers' processes. They enable an organization to maximize savings and compliance by automating the process of negotiating the optimal combination of suppliers, products, services, and prices. The use of SRM software can lead to lower production costs and a higher quality, but lower priced end product. SRM products are available from a number of vendors, including 12 Technologies, Manugistics, PeopleSoft, Tuppas Software and SAP.