FEATURE / PEOPLE AND SKILLS
FEATURE
The value of strong SRM
Recruiters report increasing demand for these capabilities and are struggling to help businesses fill positions with suitable candidates. State of Flux’s own research has found investment in people and skills development remains under- represented at the SRM table and more than a third of companies are yet to define their main supplier management roles (see research results on the People pillar). The result is businesses failing to get the best value from their key supplier relationships. Craig Jones, IT General Manager (CIO) Conventional Oil and Gas and Asset Management Excellence at Shell says the skills of the procurement and supply team should match that of their account manager counterparts on the sales and supplier side. The value of this mirror-image skillset has long been recognised and invested in. Jones, who has previously had roles in sales and supplier management, is now a sponsor for one of the business’ key relationships. He says all three roles have required the same capabilities and he was able to apply what he learned in account management to overseeing key supplier partnerships. “If your objective is long-term sustainable value you should be investing in the strength and quality of your supplier relationships. Fortunately, I've had the opportunity to work for senior people who really get this.” John Newton, head of learning and development, at State of Flux, says supplier relationship management is still a fairly new discipline and is lagging around a decade behind mature account management. “Most businesses know they’re leaving value on the table because they’re not managing their supplier relationships effectively and can’t just use the typical cost-reduction methods. After a couple of quarters picking the low-hanging fruit performance can plateau.” He says State of Flux is busier than ever delivering this training (see box out). “We teach people how to unlock value in less obvious ways. SRM is more behavioural than technical – someone goes the extra mile because they want to, not because they’ve got to.” Having relationship superiority, says Newton, is increasingly important as more businesses use outsourcing to help them perform core parts of their work. “Wherever a supplier has a line of sight to delivering your end-value there are tremendous opportunities to use the behavioural and analytical skills and systems thinking we apply in training to unlock the full potential of that customer relationship.”
To ensure organisations keep investing in these vital skills, the next challenge is to prove their worth. The best way to evidence the success of excellent supplier management is for leaders to have seen it in action, says Jones. “I’ve tried to measure value in various ways but it can turn into a whole bunch of unproductive work. Trying to use it as a lever in some sort of value ‘gonkulator’ isn’t as powerful as real examples. Fundamentally it boils down to a belief of the executives. For them it’s about the times when they’ve seen something get solved or answered quickly.” Newton says the action-based learning delivered by State of Flux focuses on which particular supplier relationships clients want to improve. This ensures the outcome of training is immediate results that show a return on investment. “Give me 12 people and I will give you 12 value initiatives,” he says. “The measures of success could be reduced inventory saving X; a lower risk rating that frees up capital and resources; a greater commitment from the supplier and more.” The training covers contract and risk management and layers behavioural skills on top. One such skill is practicing empathy to ensure people know how to get the best out of their supplier relationship. “It’s important to achieve empathy and trust between both parties, to demonstrate you understand what they do for your organisation and show you are fair and reasonable. By using these behaviours authentically – not to manipulate – you can also achieve customer of choice benefits and value. It may be harder to quantify – but it can be measured in things like a greater commitment from your supplier. If you have relationship superiority you will get these kinds of benefits. We want to open people’s minds to a different view and help them see alternatives.” The training focuses on developing supplier managers who can facilitate better outcomes for both their business and that of their suppliers. “People go the extra mile for other people. A collaborative approach that uses more carrot than stick will unlock additional benefits. Whereas, if you try to negotiate over zealously or to control suppliers or the market you usually come unstuck. You may push your suppliers into over- committing and that can catch you out in the long-run. “To understand how people’s brains work you just have to watch them, be interested, engaged and ask the right questions and that leads to better outcomes for you both. People leak information that leads to opportunities, you just need to pay attention.”
The demand for training in supplier relationship management skills is on an upwards trajectory as companies realise how crucial it is to have strong connections with their key partners. Problems experienced by organisations who neither knew who their top suppliers were, where they were, how to get hold of them and how important – or not – they were to that third party, caused some to come a cropper during Covid. There’s demand for these abilities but recruiters report a lack of them in the market. “Old school methods are not working and companies know they need to do something different,” says John Newton, who delivers relationship management skills training at State of Flux. “To make our course relevant and applicable – we ask customers to send people who manage a key relationship that they need to be strong. This immediately puts the investment in training in the right place and helps companies to quantify the value of it afterwards. “We’ve been researching this for more than a decade and are experienced at coaching and holding clients hands’ to deliver real, immediate and impactful value.” The course is split into eight modules and starts with a blank SRM plan that becomes populated throughout the duration of the training. Other tools drawn on include a stakeholder map, risk assessment and review process, account management development guide and value- release template. “As we go through the training, we challenge those who manage the relationship to consider what they could do differently. We use the templates to create a joint account plan, so that by the end people hold a completed and refreshed draft value-release plan. Once they act on this, they can use it to measure their return on the investment into training.” The company has been delivering training in a virtual format since 2016, so was well-prepared to deliver it remotely ahead of Covid. THE VALUE OF LEARNING AND DEVELOPMENT: STATE OF FLUX SRM SKILLS TRAINING
PRODUCTIVITY: GOOD WORK MEANS GOOD RESULTS
For people to do well at work – to be productive and achieve excellent results – requires a holistic approach, based around principles of job quality and good work, says Peter Cheese. “People being productive doesn’t depend on one single factor,” says Cheese. “It requires them to have the right skills, have a voice and be trusted, be properly supported and fairly recognised and rewarded, have clear alignment of objectives to appropriate business outcomes, and feel that their job is worthwhile and good for their wellbeing.” As jobs are changing at an ever increasing pace with the advances of technology, the understanding of job quality becomes ever more important. Issues such as wellbeing and work-life balance have been accelerated through the pandemic, as have issues of inclusion and fairness. Productivity doesn’t just come from pushing people harder. The principles of job quality and good work are being promoted much more strongly at national and even regional levels as part of creating thriving and healthy economies for all. Good HR practices and well trained managers at all levels in the art and science of good people management have never been more important.
SRM IS MORE BEHAVIOURAL THAN TECHNICAL. WE TEACH PEOPLE HOW TO UNLOCK VALUE IN LESS OBVIOUS WAYS.
See Skanska case study on the A14 road project (page 68-71).
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STATE OF FLUX
2021 GLOBAL SRM RESEARCH REPORT
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