ABOUT SRM, STATE OF FLUX AND OUR RESEARCH
ABOUT SRM, STATE OF FLUX AND OUR RESEARCH
About SRM, State of Flux and our research
2018 SRM Global Maturity
Leader 19 Companies (6%)
Fast follower 63 Companies (21%)
Follower 73 Companies (73%)
Advanced
Established Developing Undeveloped
Value
Engagement
Governance
People
Technology
Collaboration
About SRM
About our research This global SRM research has reached a landmark 10th year. Over ten years we have gathered and analysed more data about global SRM practice and experience than anybody else in the field. It includes feedback from over 5,000 contributors from more than 2,000 companies, with an estimated turnover in excess of £250 billion, over 1 million data points and 1,250 pages of detailed analysis and commentary. This year we have analysed data collected from 517 respondents representing 303 global companies across more than 25 industry sectors. In addition to this we have collated interesting and informative case studies from pharmaceutical giant Johnson & Johnson, the UK Government's Cabinet Office, nuclear fuel re-processor and decommissioning site Sellafield, global insurer Zurich, Royal Mail and Australian electricity distributor Ausgrid. Maturity and benchmark analysis Ten years of research has enabled State of Flux to develop a benchmarking methodology that measures SRM maturity at four levels across the six pillars of SRM. We also differentiate between leaders – those companies that we believe have developed more mature and successful SRM programmes. Fast followers, who show strong evidence of SRM development, and followers – companies ranging from those where their SRM ambition is limited and reflects mostly contract and performance management to those with genuine SRM ambition but are at the start of their journey. State of Flux SRM index The State of Flux SRM index is designed to make it easier for businesses to establish a baseline for their SRM performance and set targets for improvement. The index score is calculated based on the responses received to specific questions within our 2018 SRM survey. These questions are selected to reflect what organisations are actually doing and experiencing, and are weighted to reflect their importance to an effective overall approach to SRM. The index is based on a range of 0 to 6 and this year the average SRM index achieved by leaders is 4.3 and for fast followers 3.2.
SRM is a very simple concept – it says all suppliers are important to an organisation, but some are more important than others. By identifying the more important suppliers, understanding their viewpoints, and working with them more effectively, organisations will achieve benefits beyond the limits of the contract. In some cases, the relationship with a supplier is nurtured to foster innovation in collaborative projects which grow value for both parties. That is SRM. It’s simple on paper, but difficult in practice as it needs to be embraced by the whole organisation. Organisations are wrestling with both tactical and strategic challenges as digitisation creates new business models and transforms markets. Meanwhile, the geopolitical world is changing at a pace never experienced before. On the business radar, SRM is too often swamped by the noise of competing priorities. Advocates of SRM must be proactive and resilient and trust that they are on the right path. This research shows that SRM reduces reputational, operational and legal risk, and it creates opportunities for sustainable growth. About State of Flux State of Flux has been working globally with clients from our offices in the UK, Europe, USA and Australasia since 2004. As a specialist procurement and supply chain business, we have developed a comprehensive range of consulting support, supplier management technology and a training curriculum. These all draw on our SRM research findings and practical experience to support both private and public sector organisations to extract maximum value from their supplier management capability. This experience and deep understanding of SRM has enabled us to develop a model for best practice based on six pillars of SRM capability that when implemented effectively and with determination will propel organisations on a journey to world class SRM.
The global reach of this research enables us provide a view of maturity across the three main regions that contribute to our research. This chart shows the relative strengths of each region by pillar.
Global perspective
Europe
Asia
North America
Advanced
Established Developing Undeveloped
Value
Engagement
Governance
People
Technology
Collaboration
Over the years we have often been asked which industry sectors are best at SRM. As with the same question about companies there is no easy answer. Our definition of excellence requires strong capability and results to be demonstrated across all six pillars. The following chart demonstrates that across the industry sectors represented by responses to our survey, even those companies regarded as leaders or fast followers produce a picture of inconsistency. Overall it’s the telecoms sector that seems to be getting quite a lot right and doing it more consistently across the pillars. The sector reporting both very strong attributes while at the same time having significant challenges elsewhere is the IT/high tech sector.
Industry sector perspective
Financial services
FMCG
IT / high tech
Oil & gas
Telecomms
Utilities
Public sector
Advanced
Established Developing Undeveloped
Value
Engagement
Governance
People
Technology
Collaboration
Chart is based on leaders and fast followers from the top seven industry sectors (by number of responses) in our research. The public sector while well represented in the survey have only one fast follower. Therefore this analysis is based on their ten strongest performers
Participants of our SRM research are able to request a complimentary benchmark and index score which will benchmark your organisations SRM activities against best practice and your industry peer group.
Your SRM benchmark and index
Leaders
Fast followers
If you would like to obtain a benchmark and index score, please contact: enquiries@stateofflux.co.uk
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STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
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