2014 Global SRM Research Report - Customer of choice

STATE OF FLUX

2014 GLOBAL SRM RESEARCH REPORT

Luxury brands' approach to srm 19

Figure A. Percentage of respondents that have developed and documented an SRM value proposition

0% 10% 20% 30% 40% 50% 60% 70% 80%

○ YES ○ NO ○ DON’T KNOW

Don't kn No Yes

LEADER

LUXURY BRAND FOLLOWER FAST FOLLOWER

Figure C. Percentage of respondents that have reported tangible benefits in supplier innovation fromSRMprogrammes / activities so far

Figure B. Percentage of respondents that have gathered feedback from suppliers in the last 12 months

0% 10% 20% 30% 40% 50% 60% 70% 80%

○ YES ○ NO ○ DON’T KNOW

Don’t kn No Yes

LUXURY BRAND FOLLOWER FAST FOLLOWER LEADER

LEADER

LUXURY BRAND FOLLOWER FAST FOLLOWER

THEY PROACTIVELY LISTEN TO SUPPLIERS

THEY USE COLLABORATION TO INNOVATE

We asked survey respondents if they have gathered feedback from suppliers on how they are perceived as a customer over the last 12 months. Like SRM leaders, luxury brand organisations are more likely to gather feedback on how they are perceived as a customer than the majority of organisations. Most luxury brand organisations use a formal voice of the supplier exercise to gather feedback from their top 100 to 200 suppliers. This informs them what relationship attributes are important to their suppliers and how they compare relative to their key competitors. In addition to conducting a voice of the supplier review, Harley-Davidson stood out here for actively creating opportunities for two-way dialogue. They have a supplier advisory council to ensure they are working in harmony with suppliers. The Harley-Davidson’s supplier advisory council’s remit is to seek out issues of strategic importance at Harley-Davidson. There are now 16 supplier delegates who serve on a four-year rotation on the council and those suppliers sign a charter stating they represent and act on behalf of all suppliers, rather than on their own individual needs.

The luxury brand organisations are generally design led; often at the cutting-edge of technological advancement and in many cases using small volumes – always pushing suppliers’ capabilities and testing their flexibility. This is backed up by the numbers: we saw that 59% of luxury brands reported improved supplier innovation as a result of their SRM programmes and activities, compared to 43% of survey respondents as a whole.

McLaren Automotive understands the importance of supplier relationships to

innovation. Dom Tribe said that “creating the right environment for suppliers and their internal teams to work together is critical to making innovation work” . He adds that “innovation is not often a ‘eureka’ moment, but rather a continually evolving process, where all parties are focused on a common goal”. This continuous process requires work from both parties, but especially the buying organisation in providing quick and factual feedback to the suppliers. Dom cautions on the dangers of not providing feedback to suppliers, which can create a learned helplessness where suppliers feel unable to provide input and / or their ideas are not valued or listened to. One poor supplier experience can impact the morale of others, magnifying this learned helpless state.