2014 Global SRM Research Report - Customer of choice

STATE OF FLUX

2014 GLOBAL SRM RESEARCH REPORT

ARTICLE 33

or B A C K T O B A S I C S

Have you ever come across the scenario where a supplier had an all green RAG status on their key performance metrics and yet the relationship was headed for the scrap heap because you just couldn’t work with them?

ARTICLE BY Alan Day, Chairman and Founder of State of Flux. Call Alan on +44 (0)2078 420 600 or email him at alan.day@stateofflux.co.uk for more information on SRM or SPM.

After six years of undertaking global research into SRM, one thing that still stands out is the confusion between SRM and supplier performance management (SPM), and to some degree contract management. For many organisations the terminology seems to be interchangeable. When we asked companies the question 'what is the primary focus of your SRMprogramme?' as part of this year’s study, over a third still said it was on measuring and monitoring the performance of their suppliers or managing the contract obligations, rather than on a collaborative, two-way, value- adding relationship. While this was fewer than in 2013, it still represents a sizeable proportion. This year’s global SRM survey, with its 454 buy side responses, found that the topics most commonly discussed at reviewmeetings with key suppliers

were performance and service issues, followed by future demand and forecast information. Business strategy and plans, new supplier products / services, and value delivered came a lot further down the list, while customer performance – how easy the buying organisation was to deal with – came last. Failure to clearly define what SRM and SPM are is a common mistake. Often this leads to confusion for all parties and especially from executive stakeholders who aren’t sure what their role is. Their perceptions can range from ‘play more golf with the supplier’ to ‘push harder on the supplier’s performance’. It’s important to take the time to define what SPM and SRM are, and what they mean for your organisation, including developing a sales pitch to communicate these definitions to key stakeholder groups.