EASINGREGULATORYCOMPLIANCE But innovation was not the primary reason that AIB wanted to create consistency in the way it managed its supplier relationships. The banking sector has always been highly regulated, more so since the financial crisis, and some of the rules require an assessment of suppliers’ performance. “We were doing SRM across the organisation but, as we discovered, it was not being done in a systematic or consistent way,” says Thomas. In 2014, AIB began to create a framework, setting out how tomeasure supplier performance and relationships across the organisation. It engaged State of Flux to review and implement this framework. As a result, the bank created a scorecard for each supplier that supported a governance process, facilitating the reporting of supplier performance to the bank’s board. The systemhas helped AIB to comply with European Banking Authority rules and GL44, which sets out internal governance processes for managing outsourcing providers. “SRM put us in a good position, because we now have a consistent approach to how we govern our suppliers, and that gives our board assurance that we are in control,” Thomas says.
CREATINGCONSISTENT PERFORMANCEMEASURE
Like people, companies often need to feel right about a relationship to take it to the next level. So, when a supplier finds a customer relationship hard work, they are hardly likely to bring their best or newest ideas to the table. Yet a systematic approach to SRM can shed light on the problem, as Allied Irish Bank (AIB) was keen to discover. AIB commands leading market shares in banking products in the Republic of Ireland, with operations in the UK and US. Its group chief procurement officer, Philip Thomas tells State of Flux: “If we are going to develop in a relationship, then being an easy customer to work with is important. To stay ahead of the market we need suppliers to discuss new ideas, new technology and work jointly with us on new projects and initiatives early in their development."
Beyond compliance, AIB wanted to create a consistent understanding of its relationship with suppliers across the organisation. State of Flux helped to segment all its suppliers, not just based on the value of trade with them, but against the bank’s ‘5Cmodel’, a set of criteria that includes criticality to the business, customer impact, control, culture, cost and capability. “We wanted to look at suppliers along a number of dimensions. It helps you to measure what each supplier means to the bank, regardless of whether they are an IT company or a catering supplier,” explains Thomas. AIB’s strategic sourcing team collected data from around the business and discussed it with stakeholders to measure suppliers against the 5Cmodel. The next step in the bank’s SRM journey is to begin raising awareness of the new SRM process across the organisation and to deliver training, from executive level down. This was scheduled to begin in the third quarter of 2016 and will see AIB roll out State of Flux’s Statess software across the organisation to record and manage supplier performance.
We wanted to look at suppliers along a number of dimensions. It helps you to measure what each supplier means to the bank, regardless of whether they are an IT company or a catering supplier." Philip Thomas Group chief procurement officer
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