GOVERNANCE & PROCESS
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
106
Figure 3.3. Facets of good governance being used
PERIODIC STRATEGIC RELATIONSHIP REVIEWMEETINGS (WITH SUPPLIERS)
PERIODIC PERFORMANCE REVIEWMEETINGS (WITH SUPPLIERS)
PERFORMANCE SCORECARD / DASHBOARD
A DESIGNATED ACCOUNTABLE EXECUTIVE
AGREED ESCALATION PROCESS
PERIODIC CONTRACT REVIEWS (WITH SUPPLIERS)
PERIODIC STRATEGIC RELATIONSHIP REVIEWMEETINGS (INTERNAL)
PERIODIC PERFORMANCE REVIEWMEETINGS (INTERNAL)
RELATIONSHIP AGREEMENT OR SIMILAR (PART OF THE CONTRACT OR SEPARATE)
PERIODIC RISK REVIEWS (WITH SUPPLIERS)
PERIODIC CONTRACT REVIEWS (INTERNAL)
PERIODIC RISK REVIEWS (INTERNAL)
RELATIONSHIP SCORECARD / DASHBOARD
DOCUMENTED RACI FOR EACH KEY SUPPLIER RELATIONSHIP
OTHER (PLEASE SPECIFY)
0% 10% 20% 30% 40% 50% 60% 70% 80%
© 2014 State of Flux
GOVERNANCE MODELS
Just fewer than 60% of companies are using a performance scorecard, with around 30% using a relationship scorecard. This suggests more emphasis placed on performance management.
Governance model is the term widely used to describe the structures and rules put in place that effectively govern a relationship. It has a number of facets including meetings, reports and roles performed by designated people with rules and standards that need to be adhered to. Our question is designed to help us understand what facets of good governance are most frequently being used and where the gaps might be. Around 80% of all companies are conducting periodic strategic relationship reviews with suppliers and about the same number are also holding performance reviews. Considerably less hold the equivalent meetings internally. Although the thoroughness of preparation for the supplier meeting is unknown, the failure to hold an internal meeting might suggest real insights into the relationship and performance are not being gathered from stakeholders.
However, there are two areas of governance that should prompt most concern from this analysis.
Firstly, just a third of companies are conducting regular risk reviews with their key suppliers and only a quarter are holding an internal risk review. The second area to highlight is that only 25% have a RACI as part of the governance model. These two elements are fundamental to good governance, and in some industries, failure to have them in place would constitute regulatory non-compliance.
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