87% of companies have segmented their suppliers 48% of companies have effective risk management in place for more than half their key suppliers 90% of leaders and followers have a single designated SRM process owner
GOVERNANCE The value derived from SRM projects can be put at risk when a key factor is missing – effective governance. Yet too few businesses pay adequate attention to ensuring there is a structured approach to managing the relationship beyond getting it up and running. For example, are there regular relationship and performance reviews with suppliers? Is a scorecard used to assess the whole relationship? Are there documented roles and responsibilities? While we are encouraged to see the higher value aspirations of innovation and growth attached to SRM projects, businesses fulfilling these ambitions have built SRM on the fundamentals of strong governance. SUMMARY
Governance can be hard to define, but it quickly becomes conspicuous by its absence. It is about consistency, clarity and the ‘drum beat’ of regular reviews that drive compliance and improvement. If a far-reaching business change programme flounders after the initial impetus has evaporated and the founding personnel have drifted away, the likelihood is that poor or non-existent governance is to blame. Governance is not just making the important decisions; it’s about deciding how decisions are made. While relationships (from personal to executive level) are important to SRM programmes, good governance and process provide the structure for those relationships.
SRM seeks to strike a fine balance. On the one hand, it must exercise soft skills to develop rapport, influence people and events, and build trust. On the other, it should provide the structure required to ensure the buy-sell relationship is under control, being managed consistently and for key relationships working to a strategic plan. Our research shows organisations are making good progress in improving the governance of their key supplier relationships. However, judging by the apparent inconsistency across the development of the six pillars it is evident that some organisations regard SRM as predominately a governance exercise.
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