CASE STUDY
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
190
ATTRIBUTES OF A STRATEGIC SUPPLIER
Supplier failure generates a high risk to our core business operation.
Provides goods or services that are critical to achieving FirstGroup goals and business strategy. Has intellectual property or capital that can be used for mutual gain. Views FirstGroup as an equally important strategic client and acts on the relationship with a holistic and long term relationship perspective. Has a strong desire to work collaboratively and become a strategic partner. Has the ability, willingness and commitment at all levels to work collaboratively, to solve problems and deliver opportunities that create significant additional mutual value (cashable and non cashable). Demonstrates the right behaviours associated with SRM leaders.
Q: LIKE MOST COMPANIES YOU WILL HAVE A LARGE NUMBER OF SUPPLIERS, MANY OF WHOM ARE VITAL TO THE BUSINESS. HOW DID YOU GO ABOUT CHOOSING THE RIGHT SUPPLIERS TO COLLABORATE WITH? PK: Having firstly defined what a strategic supplier to FirstGroup actually was, the next step was to translate this definition into a new partner selection assessment process. This was based on a blend of quantitative and qualitative criteria closely aligned with current and future business needs. Our initial assessment is based on more traditional selection criteria – e.g. spend, demand, dependencies, coverage, capability, market structure, and so on. However, a finer filter is then applied taking consideration of a more qualitative range of relationship effectiveness and business benefit criteria. Importantly, this assessment involves key business partners and is validated by the supplier council. Furthermore, our findings are then openly shared with, and further validated by, our selected suppliers. Where a mutual intent is recognised, a collaborative relationship is established via the SRM programme.
Q: WHAT TANGIBLE BENEFITS HAVE BEEN ACHIEVED SO FAR AS A DIRECT RESULT OF BETTER COLLABORATION? PK: Our primary mechanism for creating new value is via formalised value improvement projects. These are jointly identified, approved and delivered through collaborative working on a shared benefit basis, using a project management methodology. To date, this approach has been highly successful, with multi- million pounds of signed-off cashable and non cashable savings already delivered from a relatively small number of projects and a healthy pipeline of future projects identified. However, none of this good stuff would have happened without creating an environment of openness, transparency, commitment to collaborative working with our strategic suppliers, and mutual trust. Never more has the paradox of sharing – ‘the more we share, the more we have to gain’ – been so relevant. We have also seen a number of examples where FirstGroup has received a range of customer of choice benefits as a direct result of improving the quality of relationships through greater collaboration. A good example of this is one supplier who, a few years ago, considered us to be a difficult client to deal with. However, since being involved in our SRM programme, they have seen just how serious FirstGroup are about being more collaborative. This same supplier now cites us as one of the better clients they deal with.
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