ARTICLE
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
66
Figure C. Proportion of leading SRM companies benefiting from customer of choice
NONE FIRST REFUSAL ON INNOVATIONS IMPROVED ACCESS TO MARKET INTELLIGENCE PRIORITY ACCESS TO SCARCE MATERIALS AND / OR MANUFACTURING CAPACITY INCREASED WILLINGNESS TO INVEST INCREASED WILLINGNESS TO ACCEPT AND MANAGE RISK PRIORITY ACCESS TO THE BEST PEOPLE AND RESOURCES PREFERENTIAL PRICING GENERAL INCREASED COMMITMENT ('GOING THE EXTRA MILE') IMPROVED ACCOUNT MANAGEMENT COLLABORATIVE PROBLEM SOLVING SENIOR SUPPLIER MANAGEMENT COMMITMENT / SUPPORT PROACTIVE IDEAS FOR CONTINUOUS IMPROVEMENT
0% 10% 20% 30% 40% 50% 60% 70% 80%
© 2014 State of Flux
BENEFITS OF BEING A CUSTOMER OF CHOICE
Risk is not the only reason you would consider setting out on your journey to customer of choice. State of Flux’s research conducted withmore than 800 companies over the last six years, has seen increasing evidence of incremental value over and above the contract, generated as a result of developing more customer of choice attributes. This value takes many forms, which include: ö ö Access to supplier innovation and more proactive ideas for continuous improvement. ö ö Better account management and support from supplier executives. ö ö Higher levels of collaboration. ö ö Initial allocation to you, and also the retention of the best supplier talent. ö ö Prioritisation for scarce capacity, products or raw materials. ö ö Supplier side investment in the relationship. ö ö Additional commitment and willingness to ‘go the extra mile’. ö ö Preferential pricing.
The chart above indicates the proportion of leading SRM companies in 2014 receiving these and other customer of choice benefits. For the most part these are not benefits the supplier is obliged to provide under the terms of the contract. What suppliers have done is to effectively exercise their right to choose which companies they provide these benefits to, i.e. which companies are their customers of choice. Against this backdrop of risk and opportunity, we can begin to visualise the destination for the customer of choice journey. That destination is a place where your organisation is well positioned to deliver savings from a collaborative approach to cost reduction. You also receive benefits and preferential treatment, leading to real competitive advantage. And where you are not your supplier’s most strategic customer, you can manage and mitigate the risks associated with this.
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