GOVERNANCE
GOVERNANCE
State of Flux opinion
Rarely a topic that sets the pulse racing, governance is nonetheless a vital component of SRM. Over the ten years we’ve conducted this research, State of Flux has consistently used the term governance to cover the oversight, control and process elements of SRM. Companies say it is one of their stronger attributes and the way in which they can demonstrate to stakeholders and, where appropriate, to regulators that relationships are being managed effectively. However, the feedback we’ve received shows more common approaches to governance do not necessarily reveal underlying operational and strategic risks because of the paucity of effective contract, performance and risk management. The issue affects not only relationship management with the most strategic suppliers, but also impacts the wider supplier base. It threatens the value businesses gain from existing contracts and undermines stakeholder confidence in the case for SRM.
47%of respondents only have riskmanagement in place for less than half their key suppliers Fig. 19. For what proportion of your key suppliers would you consider you have effective 4 risk management in place?
Only half SRM leaders have riskmanagement in place for 76%-100%of key suppliers
Fig. 20. For what proportion of your key suppliers would you consider you have effective 4 risk management in place?
Leader
Fast follower
Follower
More than three-quarters
More than three-quarters
26%
50%
Between half and three-quarters
48%
27%
15%
Less than half
Between half and three-quarters
47%
41%
36%
22%
Less than half
9%
15%
62%
4 In this context effective risk management means that a comprehensive risk assessment has taken place and is documented, typically covering all aspects of risk related to the provision of the supplier’s product or service. This will include risk and impact of failure, financial stability, supply continuity, reputational risk, etc. A single risk register is maintained and reviewed on a regular basis. Business continuity plans (BCPs) and exit plans are in place.
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STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
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