INTRODUCTION
INTRODUCTION / FOREWORD
Ten years of research reveal the secret to sustaining SRM
Contents
03 04
Procurement’s path to sustainable SRM
Sustainable SRM: how supplier relationships affect risk and growth on a global scale
The iceberg has become a fitting metaphor for suppliers’ impact on business value. Hidden under the surface is a greater source of growth – and risk – than exists within most organisations. The supply chain also produces a greater environmental and social impact than internal activity, as consumers and customers well know. We chose Sustainable SRM as our theme for this year’s report for two reasons. Firstly, organisations are under increasing pressure to become more sustainable, and in most cases the majority of the social and environmental impact comes through suppliers. Only by managing relationships with them can we improve practice through the value chain. Secondly, if supplier relationship management is the route to more sustainable business, as well as other benefits, is it important to embed it in day-to-day business practice. We are very proud and grateful to reach our 10th year of publishing the SRM report. A huge thank you to all those past and present who have contributed to the research, the report and the SRM summits. Special thanks go to you, the readers, and survey participants, without whom we wouldn’t have been able to keep the study going for so long. More than 2000 organisations have taken part and to date, we have analysed approximately 1.5 million data points measuring SRM performance. All this hopefully helps you in implementing, improving and extracting maximum value from your programmes. We first started our SRM research because clients said to us, ‘SRM is great, but how do I prove the benefits internally?’ So, each year we have looked what organisations gain from their SRM programme, both ‘hard’ bottom line benefits and ‘soft’ what we call ‘customer of choice’ benefits. Over the ten years the ‘hard’ benefits leading SRM organisations receive have remained consistently at 4% to 6% post-contract gains. However, in ‘customer of choice’ benefits there is an increasing gap as leaders pull away from the rest of the field.
Our first SRM book, ‘Value Added Supplier Relationship Management’, shows what has changed in the last 10 years – and what has remained the same. The book starts with a quote which I think is as relevant today as it was then. “Winning organisations recognise the importance of the supplier support team and equally that you are only as good as your worst supplier”. Other things have changed. Ten years ago we said organisations should segment suppliers with wider criteria than just spend and criticality, but we hadn’t identified the need for differentiated ‘treatment strategies’ for the supplier segments. We now know how this affects both the governance models and corresponding processes organisations should develop. In the ‘Value Added SRM’ study we recognised that SRM ‘must be part of the corporate DNA’ and the need for executive sponsorship. However, we didn’t put enough emphasis on the change management elements including using tools and techniques like ‘developing an SRM sales pitch’, how ‘voice of the supplier’ pays a key part of the change process, role definition, training, joint account planning and development of the value proposition. Each of these we covered in subsequent books including the development of the ‘six pillars of SRM’ and last year’s ‘SRM journey’ on how to embed a winning SRM approach. In this year’s study, we’re showing how leading organisations are more likely to make sustainability one of the many benefits they gain from SRM. I hope you enjoy it and we wish you all the best in your own SRM journey. Hopefully, we can play a part helping you make it a success.
18
Six pillars of SRM
05 07
Supplier collaboration curbs carbon
20
01 Value
CEO view: strengthening supplier relationships helps us sustain global success
Deep roots in partnership lay foundations for sustainable success at Johnson & Johnson
08
Government calls on SRM to answer complex demands
32
02 Engagement
10
After decades adapting to changing attitudes, businesses face a post-carbon economy
Cabinet Office embraces suppliers and operations in SRM vision
12 14 16
44
Sustained success through SRM
03 Governance
About SRM, State of Flux and our research
Sellafield seeks lasting value through SRM governance
Summary of key findings
56
Sustainability
Missed opportunities to support sustainability with SRM
60
04 People
Zurich finds SRM successes amid competing procurement priorities
72
05 Technology
Contract management delivers sustainable results for Royal Mail
84
06 Collaboration
Ausgrid feels the power of sustainable supply chains
96 98 99
Summary and call to action
Our partners
About State of Flux
Alan Day Chairman & Founder State of Flux
2 STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
3
Powered by FlippingBook