10 actions We’ve analysed this year’s research and condensed it into 10 key topics that reflect some of the most immediate challenges and opportunities for supplier management in the next 12 months.
for the year ahead
Research round-up
1. Learn lessons Organisations successfully navigating the current global uncertainty will be doing so with the support of their suppliers and supply chain management teams. They will have been agile and flexible, managing disruption and minimising the impact on their businesses. What they and organisations that have not fared so well need to do now is to learn. Look at what has worked and hasn’t to transition from crisis management to building more resilient supply chains and supplier management organisations. 2. Become more resilient Resilience is being able to prevent what you can, combined with the ability to manage what you can’t. A key part of prevention will be looking at supplier management and the whole procurement process. What can be done to reduce exposure to risk in category strategies and sourcing decisions and manage risk more effectively during the contract lifecycle? Most organisations have the tools; they simply need to be better and more consistently applied and place more emphasis on the prevention and management of risk. 3. Make the business case and validate The value of good supplier management may be evident to those who have worked in it, or observed it at close hand, but it still needs to be quantified and validated. Our research shows that Leaders are both making a strong business case and tracking value to validate it. 4. Align business drivers and results The case for supplier management will only resonate with the business if it is aligned to their priorities and can be demonstrated by delivery.
8. People development Far too many organisations are not treating the development of people and supplier management skills and competencies as a process. As a result, there are gaps in defining the supplier management roles and skills required and assessing these skills in teams. Review the supplier management roles and determine the required skill set, then assess current capabilities against these skills before aligning challenging and creative training solutions. 9. Fit for purpose technology The under investment in “fit for purpose” technology to support supplier management continues. Supplier management continues to rely too heavily on workarounds using existing systems and desktop tools to perform such a vital function. Create an IT strategy that enables a step change in all aspects of supplier management from collaboration with strategic suppliers and intelligent interaction while simultaneously focusing on automating standard tasks. 10. Strengthen collaboration Based on our survey feedback this year, collaboration has become somewhat narrow, but clearly, it remains a positive aspect of relationships. However, it must be seen to deliver value in ways and in a timeframe the business can see. Use an intelligent segmentation approach to pick the right suppliers to partner with and then focus on
In creating the value proposition or business case, create a clear line of sight from business objectives through implementation to delivery of benefits. 5. Build stakeholder support The current visibility of supplier management needs to be taken as an opportunity to connect it with business and stakeholder priorities for the long term. Clear some time and space to reflect on the experiences of the last two years and how supplier management has supported the business. Then, turn these into mini case studies to use when engaging stakeholders and to support the business case. 6. Suppliers have the answer Find out how you are perceived as a customer, what you can do to become easier to do business with and how you can make supplier interactions more efficient. Discover what you can do to become a customer of choice. Reach out to suppliers and internal stakeholders with properly designed and administered questionnaires to gain genuine insights from a range of perspectives – and act on the results. 7. Create strong foundations Contractual compliance, performance and risk management shouldn’t be optional. So much of the work to secure value, performance and risk mitigation in contracts go to waste if they are not proactively managed. Develop supplier management treatment strategies that clearly define the optimum requirements for contract, performance and risk management along with governance for each segmented group of suppliers and then set up to ensure compliance.
Supplier management now has a higher profile than at any other time. achieve more executive engagement; to building more robust and consistent processes; to developing skills, investing in technology and becoming truly collaborative. It is disappointing to find that this year, less than half of companies are satisfied with their supplier management programmes, compared with more than three quarters in 2021 2022 Global supply chains have suffered unprecedented disruption since the emergence of Covid in early 2020, and the geopolitical and economic shocks that followed. Over that period, our research and engagements with companies across the globe have revealed how important effective supplier management has been to help to address those challenges. As a result, supplier management now has a higher profile than at any other time. It has become recognised as a specific discipline within the broader procurement profession. Yet it still faces challenges. Difficulties range from a lack of understanding of its true impact and value; to how to
Business drivers Supply chain resilience, which combines risk management and broader strategies to safeguard
Building the foundations Segmentation of suppliers is now almost a given. While the criterion and treatment strategies might need more work, significant progress has been made. However, many organisations still insist on a light-touch approach to contract, performance and risk management, which causes problems when things go wrong. Investing in people Development of the skills and competencies required to deliver consistently effective supplier management is a process. Unfortunately, too few organisations see it this way, many focus only on training and an alarming number are doing nothing at all. Technology flatters to deceive For the first time since we initiated this research in 2009, Collaboration rather than Technology is the least developed of the Six Pillars of Supplier Management. However, many companies remain dissatisfied with their solutions and many are based on desktop tools, which are not designed for the job. Collaboration in decline This pillar has seen a serious decline compared to 2020 and 2021. While supplier engagement and joint planning have been hailed as the most effective ways to mitigate many supply chain disruptions, this may have been achieved at the expense of collaboration on wider supplier management topics.
vulnerable supply chains, has emerged as the dominant business driver for investments in supplier management. However, businesses have not lost sight of broader value opportunities, with cost optimisation and supplier innovation continuing to be sought- after outcomes. There is also some mismatch between what have been described as the main business drivers and the benefits reported. This indicates that some programmes are not fully aligned to business needs. Capturing and reporting benefits Many organisations continue to rely heavily on reporting procurement savings and struggle to capture and report the wider benefits of supplier management. A higher proportion of companies look to have mature and effective programmes in place than can demonstrate success with validated results. This is a missed opportunity and makes the case for continued investment more difficult. Engagement with senior stakeholders The visibility of supplier management at the executive and senior stakeholder level has never been higher. This needs to be sustained by ongoing engagement, supported by a strong alignment to business needs and evidence of success.
understanding and developing those relationships using joint business planning.
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