GOVERNANCE & PROCESS
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
110
THE FOUNDATIONS OF SRM
We examined these practices in detail for the first time in last year’s report and discovered a significant deficit in good practice (*robust) contract and performance management. This year we have extended the research to include risk management.
In the opening section of this report titled ‘the current state of SRM’, we revealed that more companies are making relationship management and development the primary focus of their SRM approach. However, this focus on collaboration and creating more value, must be part of a holistic approach to supplier management that also incorporates contract, performance and risk management.
*State of Flux defines robust as:
RISK MANAGEMENT
CONTRACT MANAGEMENT
All engagements are covered by valid contracts, approved by the appropriate authority; key contract terms and milestones are understood, monitored and acted upon; contracts contain appropriate SLAs and KPIs; and contract change is managed effectively.
A comprehensive risk assessment has taken place and is documented, typically covering all aspects of risk related to the provision of the suppliers product or service. This will include risk and impact of failure, financial stability, supply continuity, reputational risk, etc. A single risk register is maintained and reviewed on a regular basis. Business continuity plans (BCPs) and exit plans are in place.
PERFORMANCE MANAGEMENT
SLAs and KPIs are clearly defined and agreed; performance against KPIs is measured and reviewed on a regular basis; and corrective and improvement actions are agreed and executed.
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