Behaviours When we talk about treatment strategies, we automatically start to think about the control side of the relationship, for instance, what meetings need to take place, what reports and scorecards should be applied etc. While this is important, we know that working with suppliers and developing productive relationships is not just about exercising control but also about behaviours. This year we also decided to explore a question relating to how these behaviours are applied. Are they behaviours that both parties should adhere to? Are they behaviours that only the customer should adhere to? Or are they behaviours the supplier should adhere to? In only just over half of all responses, the behaviours have been defined and applied to both parties. Governance practices Governance practice will vary according to the organisation, the regulatory environment and the category of products and services being managed. However, some elements of good governance practice are fairly ubiquitous. These include regular operational and strategic meetings, a RASCI 1 , a defined escalation process, contact information, records of meetings and an actions log. To gauge how governance is being applied, we asked if these fundamentals were in place. When this feedback was analysed from a Leader, Fast Follower, or Follower perspective, it revealed how good governance practice is a clear feature of being a Leader. Across all aspects of good practice, governance Leaders were well ahead of Fast Followers and twice as likely to have good practice in place compared to followers. Contract and performance management In previous years we have examined contract and performance management in terms of what proportion of critical and strategic suppliers were being covered by the activity. We have consistently found that a significant proportion of these suppliers are still adequately managed. However, in 2021 only 56% of Leaders reported having effective contract and
performance management in place for more than 75% of their critical and strategic suppliers. This year we are not losing sight of this shortfall but will also look at what organisations do. Starting with contract management, we found that less than half of companies have a dedicated contract management platform to consolidate and report key contractual information in a centralised location. Only 46% of respondents say they schedule dedicated meetings to discuss contract queries and resolve issues, whereas 55% of companies rely on ad hoc meetings. 38% carry out regular checks on expiry dates and the validity of contracts. There is still a heavy reliance on offline tools such as Microsoft Excel to hold contract information. When we look at this analysis from a Leader, Fast follower and Follower perspective, we can clearly see that Leaders have significantly more contract management capability in place. In almost every case, they are twice as likely to have the capability in place compared to Followers. Moving on to performance management, we found that only 1 in 5 companies have a dedicated performance management technology platform that tracks performance against KPIs and SLAs. The question regarding KPIs and SLAs revealed that only 67% of companies have these defined to any large extent. To manage performance, 65% have dedicated review meetings (at a set frequency) to discuss performance against defined KPIs/SLAs, whereas the remainder relies on ad hoc meetings. Only about one-third of companies develop joint plans to address problems when they occur. Again there is still a heavy reliance on offline tools such as Microsoft Excel to hold performance information. When viewed from a Leader, Fast Follower and Follower perspective, we can clearly see that Leaders and Fast Followers have significantly more performance management capability in place when compared to Followers. Leaders tend to use a wider set of segmentation criteria.
For your critical & strategic suppliers, which governance elements do you have in place?
Leader
Fast Follower
Follower
Regular meetings at the operational level
91%
81%
98%
Regular meetings at the executive level
75%
53%
95%
RASCI 1
38%
18%
66%
Action Log
68%
37%
86%
Meetings log/minutes
66%
41%
91%
Escalation process
Risk management Risk management capability in
60%
36%
For your critical & strategic suppliers, which performance management elements do you have in place?
Top five risk management elements in place
89%
organisations has been much talked about in recent times, and supply chain risk management is a hot topic. In previous years we have seen a worrying lack of good-practice risk management practice being applied to critical and strategic suppliers. In 2021 only 53% of Leaders reported having robust and effective risk management in place for more than 75% of their critical and strategic suppliers. This needs to remain a ‘red flag’ for organisations to address, but we also need to look closer at what robust and effective risk management actually entails. We found that only around 1 in 4 companies operates a dedicated risk management technology platform that displays information relating to relationship risks and/or issues. We found that only 39% of companies conduct regular risk assessments, with the remainder relying on ad hoc assessments. Less than half have dedicated review meetings (at a set frequency) to discuss relationship risks and/or issues, whereas the remainder relies on ad hoc meetings. When this data is examined for Leaders, Fast Followers and Followers; it’s evident that once again, a significant step up in capability takes place between Fast Followers, Followers and Leaders.
Contact information for key supplier stakeholders 40% 23% 75%
Leader
Fast Follower
Follower
Leader
Fast Follower
Follower
65% Dedicated review meetings 35% Ad hoc meetings to discuss relationship risks and/or issues
84%
Key performance information captured via an offline programme
68%
53%
40%
For your critical & strategic suppliers, which contract management elements do you have in place?
73%
53% Performance improvement plans 17%
51% 48%
95%
Contingency/Business continuity plans
Leader
Fast Follower
Follower
Dedicated review meetings
98%
84%
Key contractual information captured via an offline programme
82%
58%
51%
29%
55%
Clearly defined contractual KPIs/SLAs
Regular risk assessments
30%
98%
82%
34%
82%
53%
55%
25%
Dedicated meetings
75%
Ad hoc meetings to discuss performance
A risks and/or issues log created in an offline platform 68% 45% 31%
50%
39%
73%
Contract document reviews 40% 32%
47%
73%
51%
A dedicated performance management technology platform 59% 32% 10%
Ad hoc meetings to discuss queries related to contract management 80% 54% 50% A dedicated contracts management technology platform 84% 68% 36%
1 Responsible, Accountable, Supporting, Consulted, Informed
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