GOVERNANCE & PROCESS
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
102
TTTTTTTTTTTT TTTU GOVERNANCE & PROCESS
Pillar executive summary
Good governance and effective / efficient process are the bedrock of SRM. While personal, and in particular executive level relationships are important, it is good governance and process that provides the framework within which these relationships can function.
The majority of companies are conducting periodic strategic reviews with key suppliers. It is important these reviews really do focus on strategy and relationship development. Other
SRM seeks to strike a fine balance between exercising soft skills to develop rapport, influence people and events, and build trust; and providing the structure required to ensure the buy / sell relationship is under control so a strategic plan can be implemented. This can be described as the ‘art’ and ‘science’ of SRM. Governance and process, therefore, can be regarded as the ‘science’ of SRM. Good progress continues to be made, with companies developing improved governance for their key supplier relationships. However, there are clearly some important challenges to be overcome. Supplier segmentation is now well established as a means to differentiate between the approaches to manage different suppliers. The challenge is to make this process more transparent and consider a wider set of criteria. This will mean companies will not only manage spend and risk, but also be able to manage opportunity more effectively.
issues should be managed through an operational and risk review process.
The governance models described by respondents have a number of gaps, the most significant being the lack of regular risk reviews. In an environment where the supply chain risk landscape is constantly changing, the lack of regular risk reviews is clearly an area for concern. Another notable gap in the governance models is the absence of a RACI. The cross-functional nature of SRM demands that roles and responsibilities of key players are clearly defined. SRM is built upon a solid foundation of good governance and process, starting with contract, performance and risk management. The feedback received from respondents indicates that these fundamentals are not in place for many companies. This is a challenge for advancing SRM, but is more of a challenge and risk for the business.
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