CONTENTS
INTRODUCTION / FOREWORD
VALUE, MONEY AND BEYOND
with a client about their business case for supplier management, I downloaded their organisation’s annual report and investor release. This showed that the corporate objective was to focus on small businesses (from a customer-target perspective). Our discussion then shifted to why their case concentrated on strategic suppliers, instead of enabling smaller providers. After making small and medium-sized suppliers the focal point of their SRM strategy, they are now moving forward with their company’s full endorsement. To further augment the argument in favour of what supplier management can do to help you protect and increase value, we hear from a variety of experts on a spread of subjects. These include how to generate innovation through supplier management (page 14); how to boost the value of your entire enterprise by raising resilience and reducing risk (page 10); how to harness the value that comes from having great people with the right skills in place – both internally and with suppliers (page 58); and how to better keep and grow the value you have already generated (page 4). We hope the combined weight of the statistical evidence presented here, together with advice and anecdotes from experts and peers, will help you enlighten stakeholders to the full extent of the value that supplier management can bring. Finally, thank you once again to all who took part in this year’s research. We appreciate the time you took out of increasingly weighty workloads to share your experiences. Your input enables us to continue to monitor progress in this vital field and we hope it helps you to assess your progress against that of your peers. Now is the time to keep up the momentum you’ve already gained and adopt a new set of goals to grow and protect value, in all its various forms.
CONTENTS
24 Value
Financial rewards are just one of many reasons to set up, expand or improve a supplier management programme.
03
Foreword: Facilitate supplier management's full potential
38 Engagement
04
Growing and protecting value
R ECOGNITION OF supplier chains and shone an uncomfortable light on those that lack solid supplier management. We could already see from last year’s case studies and feedback that it was the companies that had good links with their key partners who had priority access to vital goods and services. It management’s value is on the rise. Covid-19 has accentuated the vulnerability of supply was those who knew who their strategic providers were and had taken the time to form meaningful, mutually beneficial connections with them who, together, triumphed. This year a majority of you tell us quite plainly that as a result of the pandemic, the profile of supplier management has risen sharply up the list of focus areas. Increased attention on its importance provides an opportunity for procurement to set up, expand or improve existing programmes for the good of their organisations. Previously, businesses have been predominately focused on money as a reason for carrying out these activities. They wanted to ‘extract cost’ from relationships – but that’s not how successful collaborations work.
Throughout this year’s State of Flux report, the 13th we have published, we hear from individuals and organisations who tell us about the opportunities and value supplier management affords them beyond the financial. Find out what Electrolux, Skanska, AMP Capital, New Zealand’s Ministry of Business, Innovation & Employment, Intuit, Kelly, Yondr and AIB plan to or already have achieved as a result of their programmes. It is those who aim for more than simply a saving here or a discount there that attain success far beyond the bottomline. As we report here, not only can the strongest performers cite increased supply chain resilience, innovation improvements and reduced risk among their accomplishments – they can quantify them. But many struggle to explain and measure these ‘beyond commercial’ benefits. See advice on how to overcome this challenge in our business case article on page 8 and throughout the features, analysis, case studies and interviews in this year’s book. Sometimes, it is simply a question of looking at a problem from another perspective. Prior to a recent meeting
08
How to make a business case
10
T he value of resilience and risk mitigation
14
Creating new value through innovation
18
About Supplier Management, State of Flux and our research
48 Governance
20
The Six Pillars of Supplier Management
22
Summary of key findings
30
Ministry of Business, Innovation and Employment: Tackling social and climate change
34
Intuit: Internal and external partnering provides impact
62 People
44
Electrolux: Disciplined supplier management delivers strong performance
54
AMP Capital: Showing leadership on modern slavery
58
Maximise the value of your human resources
68
S kanska: The success of strong supplier collaboration
74 Technology
80
AIB: Technology-enabled supplier management
90
Kelly: Elevate suppliers to evolve
94
Covid-19: Supplier management in the spotlight
NOT ONLY CAN THE STRONGEST PERFORMERS CITE INCREASED SUPPLY CHAIN RESILIENCE, INNOVATION IMPROVEMENTS AND REDUCED RISK AMONG THEIR ACCOMPLISHMENTS − THEY CAN QUANTIFY THEM.
101 Y ondr: Getting supplier management right from the start 104 Summary 105 Call to action 107 About State of Flux
84 Collaboration
Alan Day Chairman & Founder State of Flux
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STATE OF FLUX
2021 GLOBAL SRM RESEARCH REPORT
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