STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
Luxury brands' approach to srm 23
OUR APPROACH TO THE LUXURY BRANDS STUDY
DEFINING A LUXURY BRAND
Our first challenge was to create a list of luxury brands. This proved more challenging than we thought as the definition of a luxury brand varies from person to person. We used the following criteria from ‘The Concept of Luxury Brands’ by Dr Klaus Heine as a basis to define a group of companies to talk to: ö ö PRICE: The brand offers products or services which belong to the most expensive of their business sector. ö ö QUALITY: The brand offers everlasting top-of-the-line products, which won't be disposed of even after long utilisation or defect, but rather repaired; and which often gain in value over time. ö ö AESTHETICS: The brand would never present itself in less than perfect style. Whenever and wherever the brand is seen, it embodies a world of beauty and elegance. ö ö RARITY: In contrast to mass-market brands, the brand needs to limit its production and tries not to disclose its (high) sales numbers. The brand may use scarcity as a sales tactic, plays hard to get and is not available at all times or places. ö ö EXTRAORDINARINESS: The brand has a mind and style of its own and its products often surprise with the ‘expected unexpected’. ö ö SYMBOLISM: The brand stands for ‘the best from the best for the best’; its charisma fills the room, and regardless of whether it is of a conspicuous or understated nature, it almost always symbolises quality and pride. After much debate, Dom Tribe from McLaren Automotive and State of Flux approached the CEOs of the companies selected to request they participate in the study. The group was invited to complete the survey, participate in an interview / site visit and join a workshop specifically for luxury brands to help us understand their approach to SRM. There were 17 organisations that participated this year and hopefully more next year! Thank you to all those that contributed to this year’s luxury brands SRM study and roundtable discussion, and a huge thank you to Dom Tribe and McLaren Automotive for their support in conducting this research.
CONCLUSION
Throughout this really interesting study of luxury brands, we were able get a real insight into the challenges of staying at the leading edge of technology and creating an exceptional customer experience while not always being in a dominant position in supply markets. It is clear that many luxury brand companies recognise the role SRM plays in developing more collaborative relationships with their key suppliers to benefit from innovation and flexibility, and secure their position as a customer of choice. They clearly work hard to create a supplier experience that will engender loyalty at a personal and company level to go beyond that created by the cache of the brand. While luxury brand organisations may well be able to learn from others the benefits of creating a good governance model, others can undoubtedly learn from the luxury brands what can be achieved by treating suppliers as an asset rather than a risk. As Stephen Potts from Sunseeker succinctly puts it: “As a procurement industry we need to stop pretending we can commoditise strategic suppliers and get on with working in partnership.”
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