2021 Global SRM Interactive Research Report

COLLABORATION

resources, which was relayed by 60% and 47% of Leaders respectively.

For what proportion of your most key suppliers have you created joint business plans?

This year, we also asked respondents to specify the proportion of their key suppliers for which they have created a joint business plan. Not surprisingly,

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The least reported benefit is linked to innovation – more specifically getting early access to new, innovative products or services that suppliers happen to work on. Even though only 37% of the Leaders reported this benefit, the case of establishing a mature supplier management programme still holds. This is understood better when we compare the customer of choice benefits that Leaders receive with those achieved by the Fast Followers and Followers.

the responses of Leaders, Fast Followers and Followers are characteristic of their supplier

Leader

Fast Follower

Follower

75-100%

management programme’s maturity. Approximately 60% of Leaders have established joint business plans with more than half of their key suppliers. This percentage drops to 31% for Fast Followers and only 8% for Followers.

26%

50-75%

33%

22%

Customer of choice

Less than 50%

Over the past decade, organisations have increasingly become aware that not all of their key suppliers treat them as customers of choice. This often leads to friction, performance issues, and increased risk. At the same time, it prevents organisations from gaining the benefits associated with having a productive relationship. When we asked organisations to self- assess their status as a customer of choice for their key suppliers in 2017 it emerged that just over half believed they held this status for more than 50% of their key suppliers. In 2021, this figure has marginally improved to 55%. This is where the more developed supplier management programmes of Leaders are reaping rewards. According to this year’s responses, an impressive 91% of the Leaders are confident that they are a customer of choice for more than half of their key suppliers.

40%

69%

Are your relationships fit for collaboration?

92%

Suppliers and customers who are able to quickly understand each other, work together seamlessly and have a strong, embedded relationship are more likely to rapidly and efficiently overcome challenges. From a purely practical perspective, they will be ready to hit the ground running when required, without having to build and develop working relationships as a starting point while coping with an urgent situation. As we highlight here, almost three-quarters of the Leaders in supplier management report that their suppliers will go the ‘extra mile’ for them.

Nearly all Leaders agree that their mature supplier management programmes improved collaboration with key suppliers, yielding benefits such as increased trust in the relationship, improved understanding of mutuality and a greater focus on innovation. It is important that organisations continue to accelerate and expand on collaboration with their top partners to make the most out of their supplier management programme. Unless proactively encouraged and focused, collaboration is in danger of remaining a ‘nice to have’ when things go wrong, but fails to become embedded as part of a business as usual approach to supplier management. Having it built into a standard approach to supplier management can be vital when issues occur.

Developing collaborative and more productive relationships can be a challenging task. A prerequisite for being successful in this challenge is to ensure the relationship is fit for collaboration, before beginning to explore and potentially invest in specific collaboration opportunities. Embedding a 360-degree relationship health check in every supplier management programme is an incredibly useful evaluation tool. When conducted towards the start of a strategic engagement, it provides a baseline for the relationship and identifies what is working well, what requires attention and lastly what could be improved. If several areas aren’t working as they should be, the chances of delivering on your joint goals and objectives are jeopardised. When we asked how many companies conduct such health checks as part of their supplier management programme, the answer was only 35%, a figure that is significantly lower to the one reported in last year’s report (45%). A potential justification for this could be the operational disruptions caused by the pandemic, preventing organisations from focussing on strategic initiatives. Amongst Leaders, this figure fell from 86% in 2020 to 75% in 2021.

This is an incredibly useful and privileged position to be in when difficulties (or a global disaster) arise.

The most effective way to increase collaboration is to define its purpose via shared goals and objectives between both your organisation and that of your key supplier. By undertaking this initial step, both parties can focus their collective attention in the right direction. Once these are mutually agreed, the next step is to create a plan that requires collaboration to deliver. In our view, collaboration means having open and honest communication, sharing information between all parties to improve overall information visibility and the acceptance of collective responsibility. For more information on how you can improve collaboration throughout your supplier management programme, contact enquiries@stateofflux.co.uk

Proportion of key suppliers for which your organisation is considered a customer of choice

Customer of choice benefits

COLLABORATION MEANS OPEN AND HONEST COMMUNICATION, INFORMATION SHARING AND THE ACCEPTANCE OF COLLECTIVE RESPONSIBILITY.

While it is acknowledged that some ‘customer of choice’ benefits are difficult to quantify, the consistency with which they are reported points to them being very real. These are most frequently cited by Leaders and Fast Followers and include improved account management and executive focus, which was reported by around 75% of Leaders, and additional commitment, where the supplier will go the ‘extra mile’, which was reported by 74%. Other benefits of being a customer of choice are more tangible, such as access to a supplier’s best people and