Telstra therefore started to look for ways to cut complexity and remove duplication in the way it was dealing with suppliers. In 2014, then CEO David Thodey distributed a paper that described how procurement leaders needed to adopt a more strategic focus to help the business to grow. It prescribed better relationships with key suppliers and promoted new ways of thinking. “We were doing a good job managing the operational and tactical side of things, but we wanted to focus on the strategic side. Like most procurement organisations we are asked to do more with less, but we needed to focus on ensuring we were able to realise a benefit from a supplier and sustain those benefits. “We wanted to take the relationship approach to managing suppliers and use it to open the door to innovation and mutually beneficial growth. That’s the Holy Grail of procurement,” says Portelli. GROWING BUSINESS AMBITION It was amove designed to support the company’s transition froma traditional telcommunications provider to a global technology company and would set out the way forward inmanaging supplier relationships. “Before we introduced SRM, we might have different people across the business discussing different contracts with the same supplier and they were not always coordinated,” says Portelli.
Telstra surveyed 180 stakeholders to better understand how the procurement function could add value by developing their SRM capability. It then built a framework for how the SRM programme would be put into practice. Portelli took over responsibility for the programme in February 2015 and hired State of Flux to help implement it. Together they tested themethodology and introduced a pilot. After a short review, the final SRM programme was launched in July 2015. MORE COORDINATION The aimwas to incorporate the top 100 strategic suppliers in an SRM programme within two years. Telstra is currently ahead of schedule after engaging 68 suppliers in the first year. SRM is now transitioning to a centralised function within procurement, Portelli says. The idea is that instead of having, say, 10 different meetings with the same supplier across the business, the SRM unit can oversee a smaller number of meetings with agendas that focus on how the two parties can add value to the relationship. “When we talk to our business stakeholders we can show them we’re here to make life easier and to get an outcome more quickly. “I know how hard it is to catch up with suppliers to ensure we have monthly cadence for KPI management. After you close the deal, it can fall by the wayside. Being a full- time function has helped us improve our approach,” says Portelli.
The introduction of the SRM unit has also met with some challenges. “As a traditional procurement function, there was some reluctance to hand over the relationships. To overcome that we needed to build trust. We are not trying to undermine existing relationships. It has been a real measure of success for the programme that people now understand the importance of engaging suppliers at the right time and with the right information to drive the right outcomes.” A CHANGE INMIND SET Themove towards amore structured approach to SRM is also changing the perception of procurement froma function that is only focused on cost saving, to one that works with suppliers and stakeholders toward business goals. “SRM needs to challenge the traditional procurement model. If you are not aligned with the business, stakeholders and their objectives, you are not going to add any value,” Portelli says. In Telstra, the newway of thinking about procurement is already delivering benefits. Around 10%of the department’s savings targets have been met by increased revenue. Themessage is clear. Not only can SRM savemoney; it can help businesses grow.
SRM needs to challenge the traditional procurement model. If you are not aligned with the business, stakeholders and their objectives, you are not going to add any value.”
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