VALUE
VALUE
Innovation becomes a top-three driver for SRM for the first time Fig. 4. What are the most important business drivers for your investment in implementing/ developing SRM in the next 12 months?
Nearly a quarter of leaders accrue post-contract benefits of 6%or more fromSRM Fig. 5. What financial benefit* do you believe your SRM programme is delivering? *average post-contract signature benefit
Riskmanagement is the greatest non financial benefit fromSRM
SRM leaders prioritise innovation as an SRM driver
A compelling value proposition has to be clearly linked to the company’s most important business drivers. Over the last five years, the top two drivers have not changed. Cost reduction/avoidance and risk management/reduction remain the overriding business drivers for investing in SRM and are among the top three business drivers for 54% and 52% of respondents respectively. But elsewhere we do see significant changes. More companies than ever before see SRM as the vehicle to deliver more innovation to the organisation. The pattern of business drivers is consistent across all benchmark groups except for SRM leaders, who prioritised innovation more than any other group.
Fig. 6. Apart from financial benefits, what other benefits have been delivered as a result of your SRM programme?
Risk management
Cost reduction/avoidance
Leader
Fast follower
Follower
42%
54%
Service level improvement
Risk management / reduction
More than 6% per annum
36%
52%
23%
Supplier innovation
14%
More supplier innovation
27%
4%
43%
Improved account management
Organisations who lead in SRM benefit most from it
Improving your internal / end customer experience
4% to 6% per annum
25%
37%
23%
Procurement professionals build their credibility on a track- record in achieving tangible, measurable outcomes. It is the key that will open doors to better and bigger projects, as well as more influence in the business. SRM can deliver results, and SRM leaders prove it: 46% of them report achieving financial benefits of more than 4% after signing supplier contracts. Only 24% of fast followers can demonstrate this level of return while only 8% of followers can. The industry sector delivering the best financial return from SRM is the IT/high tech sector: 26% of its respondents reported benefits more than 4%. Being able to quantify SRM related financial benefits remains a challenge: more than half of respondents are still unable to do so. But the benefits of SRM are not only financial. Effectively managing relationships with suppliers can achieve all sorts of non-financial returns. Chief among them is better risk management, cited by 42% of survey respondents. Service level improvements were achieved by 36% of businesses, closely followed by supplier innovation at 27%. But the picture changes when we look at SRM leaders: the greatest non-financial benefit they achieved was in innovation.
Internal or end customer experience
10%
Improving supply chain efficiency
23%
4%
28%
Proactive ideas for continuous improvement
Service level improvement
2% to 4% per annum
21%
27%
36%
Regulatory compliance
21%
Regulatory compliance
21%
15%
18%
General increased commitment (‘going the extra mile’)
Quality improvement
Up to 2%
20%
13%
9%
Quality improvement
11%
Improving speed to market
16%
17%
11%
Preferential pricing
Helping achieve your sustainability goals
Don’t know
13%
6%
9%
Secured the best supplier resource
44%
9%
60%
Suppliers more willing to accept and manage risk
8%
Speed to market
8%
Help achieving your sustainability goals
5%
More than half of respondents are still unable to quantify financial benefits fromSRM.
SNAPSHOT ANALYSIS
Priority access to access to scarce materials and / or manufacturing capacity
Only 5% of respondents see sustainability as a non-financial benefit of SRM. It is a surprising result given the opportunities to reduce environmental impact and risk of unethical trading that suppliers, managed in the right way, can offer. Companies that want to thrive and grow in the 21st century need to recognise that collaboration with suppliers to make all supply chain operations more sustainable will no longer be a ‘nice to have’, it will be an imperative to creating business value.
4%
24
STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
25
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