2014 Global SRM Research Report - Customer of choice

BUSINESS DRIVERS & VALUE

STATE OF FLUX

2014 GLOBAL SRM RESEARCH REPORT

CUSTOMER OF CHOICE BENEFITS

HOW DO TANGIBLE BENEFITS TRANSLATE TO FINANCIAL VALUE?

We see a difference in the level of customer of choice benefits being reported by leaders. They have a significant advantage over fast followers and followers for continuous improvement ideas, innovation, priority access to the best supplier people, collaborative problem solving, and general commitment or ‘going the extra mile’. When viewed in conjunction with the financial benefits leaders are achieving, this makes a compelling case for more investment in SRM.

Measuring and reporting SRM benefits remains a challenge. Notwithstanding the different ways in which organisations capture and report financial benefits, we still find respondents reporting significant benefits. 25% of respondents report post-contract financial benefits equating to more than 4%. The proportions achieving this across the groups are 46% of leaders, 34% of fast followers and 21% of followers. There are still a high number of organisations that don’t know what financial benefit they are achieving as a result of SRM initiatives. More effort is required to find an agreed mechanism for capturing and reporting benefits. SRM will always be challenged to show a number to ensure ongoing investment.

SHARING THE VALUE

A relationship where both parties have a vested interest in success is key to successful SRM. Sharing benefits with suppliers is a practice more widely adopted by leaders and fast followers. We see an appreciable improvement this year, where shared benefits increased from 16% in 2013 to 25% this year.

MEASURING SUCCESS

While businesses have an understandable interest in direct financial benefit, this is not the only way to measure the success of an SRM programme. Quite rightly, as this would drive short term behaviours – the opposite of effective SRM. Therefore, almost 50% of companies using internal stakeholder and supplier feedback is an encouraging sign.

SRM essentials

ö ö Ensure SRM is clearly aligned to key business drivers at all stages in the lifecycle. ö ö Develop and document a clear SRM value proposition and socialise widely. ö ö Focus on and implement the SRM activities that impact on the most important business drivers. ö ö Develop benefits capture and reporting to demonstrate success. ö ö Gather more internal stakeholder and supplier feedback as a measure of the impact of SRM. ö ö Share more SRM benefits with suppliers.