2022 SRM Research Report - Building Resilience

Contents

Invest in people and relationships

Resilience in the supply chain begins with people and how they behave. annual financial benefits from effective supplier management and collaboration (page 44). Yet most procurement and supply chain functions continue to suffer from a legacy of underinvestment. They be any higher on a board’s agenda than it is now. Risk management is now embedded alongside cost as a key business driver for supplier management (page 28); and 1 in 5 Leaders report more than 6% in The past few years have seen the world and its businesses hit by a series of seemingly never-ending challenges. We’ve witnessed the all-pervasive attack of Covid; the effect of a single container ship becoming stuck in the Suez Canal; the impact of the invasion of Ukraine; and we are now set to struggle with an inflation and energy crisis. As Sébastien Bals, CPO at global biopharmaceutical company UCB, points out (page 107): “Nowadays, we go from one crisis to another, to another. The time to recover after any one of them has been significantly reduced. If your supply chain cannot cope with these fluctuations, your overall resilience diminishes.” Procurement and supply chain cannot

require time, money and resource to improve not only processes and systems, but also to invest in the calibre of their people. Resilience in the supply chain begins with people and how they behave. It requires individuals who are able to build relationships externally with suppliers and internally with stakeholders, at every level (page 52). It needs those with the capability to sell the value of supplier management and to respond quickly and adeptly to change (pages 6, 8 and 19). Talent, experience and emotional intelligence can be hard to find; and where it is found it requires support and understanding (pages 86 and 36). It was the organisations (and the people within them) who had good supplier management that were less scathed by the pandemic. They were five times more likely to have a faster speed to market, and in these uncertain times, that agility to pivot brings resilience. Those who had already segmented their supply base, dedicated time to regular reviews, monitored and embraced two-way conversations, were far better able to ride out the storm together. Others were left floundering when problems struck. The Leaders of the best developed supplier management programmes are the most confident that they are well placed to tackle future disruption (88%). Suppliers too, need the right environment to perform. All too often we hear complaints of poor supplier performance only to discover that the root cause is driven from within the buying organisation itself.

Structures, processes and performance management; constructive, communicative relationships; and joint plans in which you can both thrive are key. They remain overwhelmingly supportive of programmes when engaged correctly and treated with respect (page 26). Recognising this, a rising number are now defining the behaviour expected from both themselves and their suppliers. An increasing number of organisations (59%) now recognise that supply chain resilience goes beyond risk management, and they are looking to supplier management to help bolster their position. Find out how to make the case for investment on page 19. Finally, my grateful thanks to all the 424 respondents from 304 companies who participated in this, our 14th annual supplier management research, and those who have shared tales of their successes and challenges throughout the pages of this book. I hope their stories will reassure and inspire because working constructively and closely with your most critical suppliers reduces risk, bolsters resilience and ultimately gives you both the best chance of success.

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03 04 08

42 48 52 58 64 70 76 82 88 92 98

Introduction

Value

Defining supply chain resilience

Case study: Chevron

Case study: Telstra

Engagement

12 16

Embedding resilience at every step

Case study: Thames Water