“We can only go far if we go together with our suppliers”
Key role to play Supplier relationship management has led to greater clarity about objectives, the commercial targets and which suppliers are important; but it has been a significant cultural shift. The elevated role and responsibility for procurement in the supplier relationship and supplier governance has given us additional dimensions to consider. We are still a complex company, with different parts operating at a different pace, so stakeholder management remains incredibly important. Suppliers are benefiting from improved, formalised governance structures that result in actions, outcomes, and constructive dialogue covering social inclusion, indigenous business, savings, growth forecasts and more. In my seven or so years here, I’ve never seen Telstra so succinctly communicate our corporate expectations to suppliers. This
There are four critical elements to Telstra’s supplier management: 1. Supplier segmentation – defining which suppliers to focus SRM efforts. 2. Supplier ownership – ensuring the top suppliers have an appropriate executive as the ultimate owner of the supplier relationship. 3. Formalised governance – ensuring Telstra and our suppliers agree to minimum formalised cadence to regulate the relationship (the regularity of business reviews). 4. Joint business planning – jointly agreed objectives that align with Telstra’s corporate objectives and act as a mechanism for collaboration
comes from our CEO, Vicki Brady, and her leadership team, who have been brilliant in their articulation of our T25 strategy and fostering that relationship of collaboration with key suppliers at the executive level. The future There is no doubt that moving to Agile is an ambitious goal, but we have seen the ability (especially for a large company with a lot of legacy) to move at pace as we accelerate our change to deliver on our goals. We recognise that change can create uncertainty with our suppliers, but we equally know we are entering an exciting phase which will see us continue to unlock the benefits of SRM as we continue to achieve our T25 strategic ambitions. And like cycling in a peloton, we can only go far if we go together with our suppliers. Images reproduced with permission of Telstra
Why SRM is critical Supplier relationship management is crucial to the success of T25 in an Agile environment because without it you are operating at speed while ignorant of potential pitfalls. Using a cycling analogy, SRM provides you with
altering demands. The idea is to deliver more often, in smaller chunks, react to any change that is required and build up velocity. And the key to generating more value is increased collaboration. The result has been an increased alignment of stakeholders on joint business objectives, wrapped and controlled with good supplier governance. But it is actually much bigger than that. Agile-at-scale across Telstra is fundamentally changing how our business runs; we are shifting our mindset to support our T25 objectives and mobilising our Functional Units, Procurement and our suppliers around common goals and priorities. It means now, more than ever before, there is the need for supplier relationship management (SRM). Procurement is increasingly leading the way forward. SRM to support value The procurement team - one of the largest in Australasia - is positioned inside our Global Business Services business and therefore is in a key position to support and enable Telstra’s commercial and growth objectives. Procurement is also at the heart of the company’s relationship with suppliers. It helps to manage AUS$12 billion per annum of influenceable spend, spread across around 5,000 service and product suppliers, both domestic and international. This covers everything from the purchase of a 5G tower to submarine cables, fibre optic network infrastructure to IT software, devices, contact centres, professional services and much more.
Procurement plays an important role in leading contract negotiations and uses market and category intelligence (qualitative and quantitative) to identify areas for improvement across the value chain. This capability of the team builds upon the corporate policies and governance frameworks to provide a level of assurance to the Functional Unit that our suppliers have demonstrated the required compliance to statutory regulations and Telstra’s Supplier Code of Conduct. This central position at the heart of Telstra and supplier relationship gives procurement oversight of the most critical suppliers and provides ‘one version of the truth.’ It looks at the total value of the company’s key relationships (spend on both sides) and helps Telstra to maximise the value of the supplier achieved through formalised business governance (annual, quarterly and monthly business reviews) with defined roles and responsibilities of those in attendance. SRM at Telstra uses a segmentation methodology to identify the Top 100 strategic, critical, and emerging suppliers so that our management resources and relationship is regulated in a clear and consistent manner. The purpose of good governance aims for a ‘no surprises approach’ by sharing our strategic ambitions such as T25 with key partners and enabling them to return the same levels of transparency. The idea is to build trust; maximise the value of the relationship; and to foster a proactive approach to prevent risk and potential issue resolution together.
the lights when cycling at night. It has been estimated by global
and strategy development (i.e. responsible business, ESG, sustainability, resilience, performance and innovation).
consultancies that 75% of value gained from strategic sourcing and contract negotiation is eroded within 18-24 months without effective SRM but that timeframe can be much sooner. Without SRM we simply do not know what the risks are or the level of supplier resiliency. And not knowing that in a demanding environment is frightening. While insights into suppliers and the market are important, the real value comes from building supplier relationships. This means engaging with suppliers to understand the value they bring, how they operate, keeping up-to-date with any business changes (i.e., acquisitions, mergers) and ensuring they have a sound understanding of Telstra’s strategy and their part in helping us to achieve it. The Functional Units are always having conversations with suppliers, what has changed is the richness of them. It is the depth that we are able to take an idea beyond a concept and apply it to a real-life scenario. We have never had so many joint business plans. The demand for SRM, and purposeful supplier engagement, is there.
“Change starts from within, and it is essential our suppliers are included on this journey.” OPINION SNAPSHOT:
Neil Wittmann-Griggs, Supplier Relationship Management Supplier Services | Global Business Services
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