ARTicle
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
42
6.0
○ LEADERS ○ FAST FOLLOWERS ○ FOLLOWERS ○ BEST PUBLIC SECTOR RESPONSES ○ AVERAGE OF PUBLIC
ADVANCED
4.5
ESTABLISHED
3.0
DEVELOPING
1.5
SECTOR RESPONSESE ECLUDING THE BEST
UNDEVELOPED
BUSINESS DRIVERS & VALUE
STAKEHOLDER ENGAGEMENT & SUPPORT
GOVERNANCE & PROCESS
PEOPLE & SKILLS
INFORMATION & TECHNOLOGY
RELATIONSHIP DEVELOPMENT & CULTURE
© 2014 State of Flux
believe that a failure to exercise proper control and management of risk, contracts and performance is a major factor leading to poor supplier relationships. Conversely, great performance is usually the result of a strong partnership, characterised by a shared vision of what success looks like for both organisations and collaborative working within a well-constructed contract supporting performance metrics and a structured, well-governed relationship. For good or bad, supplier relationships are largely framed by the sourcing process. If this process is conducted professionally and to best practice standards, the resulting contract will provide a foundation upon which a successful relationship can be built. By this I mean getting the basics right, such as a clear definition of requirements; a fair and transparent supplier selection; and above all, a contract that meets the needs of both organisations. However, best practice doesn’t end there. It must extend to managing the ongoing relationship by implementing good governance. This will take form of regular reviews including senior stakeholder engagement, clear roles and responsibilities, and shared plans ensuring the obligations and value for both parties embedded in the contract are delivered. With this established as a platform, the possibility to deliver additional value can and should be explored. I applaud opening up government IT contracts to a wider range of suppliers including small and medium-sized enterprises (SMEs), and this will certainly create more competition (and I suspect more innovation). Frommy experience of dealing with government as a supplier of consulting and advisory services, I believe this to be another category that could benefit from being opened up. The question is: what does
government procurement do with this new found competitive leverage?
Unless the strategic sourcing and category management processes are improved and, most importantly, effective contract, performance and relationship management are introduced, I fear we will just have more examples of failure – just on a slightly smaller scale each time and perhaps these will be less likely to dominate or even feature in the headlines. All this points to a suggestion that government needs to invest to better develop their SRM capability for dealing with both large and small suppliers. Of the 19 public sector bodies that responded to the State of Flux 2014 global SRM research, only one reported an approach to SRM that placed it amongst what we consider to be the leaders in this field. The average response of the remaining respondents placed them below the average for companies regarded as followers in all areas except information and technology. The good practice developed and implemented by at least this one public sector procurement organisation dispels the myth that developing supplier relationships in the public sector is in any way inconsistent with the Official Journal of the European Union or other public sector procurement regulations. On the contrary, good practice SRM can be the means by which best value for the tax payer is derived from contracts.
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