BUSINESS DRIVERS & VALUE
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
44
TTTTTTTTTTTTTTTTTU BUSINESS DRIVERS & VALUE
Pillar executive summary
SRMmust be aligned to the business objectives and needs to be seen to be making a relevant contribution. Respondents still report that SRM is an effective vehicle to deliver on a wide range of business drivers.
increase between 2012 and 2013, which has been maintained this year.
This year has seen cost reduction return as the most important business driver, followed closely by risk reduction. Companies are looking for more from supplier relationships over and above cost and operational benefits. Leaders in particular are looking for more value. 68% of leaders and 68% of fast followers have developed and documented a clear value proposition / business case for SRM. This compares with an average of 38% across all other respondents. Of the companies that have developed their SRM value proposition, it’s the leaders and fast followers who are communicating it more effectively to stakeholders. The business drivers that leaders and fast followers consider to be important are broadly the same. Fewer followers are able to identify their key business drivers, and where they do there is more emphasis on operations and performance. Leaders, and to some extent fast followers, are far more likely to be identifying customer of choice related business drivers. The proportion of respondents reporting business drivers such as cost reduction, cost avoidance, risk reduction, and service level and quality improvement benefits, all showed a notable
Leaders enjoy a financial advantage with 46% reporting benefits equivalent to 4% or more of contract value. Customer of choice benefits are more commonly reported by leaders, including supplier innovation and preferred access to scarce capacity / materials, as well as securing the best supplier resource. Measuring and reporting SRM benefits remains a challenge. Nonetheless, the indicators are that a strong financial return on investment in SRM is being achieved where it is being deployed effectively. We believe ongoing investment in SRM will rely on being able to show demonstrable return. An encouraging development this year, is that close to 50% of companies use internal as well as supplier stakeholder feedback to measure the success of their SRM programme. Sharing benefits with suppliers has seen an appreciable improvement since 2013. Evidence shows that this is a practice more widely adopted by leaders and fast followers.
Powered by FlippingBook