6. Problem solving
14. Change management 49% 41% 18% 15. Risk identification
Skill and competencies Here we look at the generally acknowledged skills and competencies required for effective supplier management. Which are the most important? Which are most in need of development? And which have been included in training so far? This analysis reflects a consensus on the most important skills and competencies required to deliver effective supplier management and what organisations believe most need to be improved compared to now. The final data set covers those skills and competencies training has addressed in the past 12 months. This will reveal where companies are focussing their training efforts and whether it is aligned with business needs. Communication is considered the most important skill for effective supplier management, as demonstrated by its selection by 84% of respondents. It also ranks eighth as being in need of improvement by 35% of respondents and has been included in training by 22%. Trust building comes next, followed by strategic thinking, influencing skills, cross-functional working and problem solving. All of these are reported as being in need of improvement and also showing a significant shortfall in the training provided. It should be noted that they are what are sometimes described as ‘soft’ skills and rely, to a certain extent, on personal attributes. Towards the bottom of the list come the skills and competencies, that while useful and necessary, are considered less important and in need of improvement and/or have been addressed by training. Organisational design Thinking about the best organisational solution for delivering supplier management has occupied managers for many hours. The reality is that there is no single suitable design, each needs to take into account many factors specific to the organisation. Here we address the two most often debated topics. 1. Where in the organisation is the execution of supplier management best placed? and 2. How should it be resourced?
70%
Supplier management organisational solutions (all respondents)
Skills and competencies ranked in order of importance, need for improvement and training provision (all respondents)
27%
9%
8. Risk management 7. Commercial and contractual expertise 40% 36%
48%
9% Stand-alone centralised Supplier Management function
6% In another function (central / group)
30%
64%
Most important to Supplier Management Most need improvement Addressed by training within the last 12 months?
18%
16. Risk mitigation
46%
13% In another function (decentralised / business unit)
8% No clear ownership 14% In the procurement function (decentralised / business unit ) 50% In the procurement function (central / group)
28%
62%
14%
37%
25% 9. Facilitation skills
40% 17. Project management 21% 15%
35% 1. Communication 22% 27% 2. Trust building 11% 3. Strategic thinking
57%
84%
27%
10%
18. General product / service knowledge 37% 17% 13% 19. Understanding the sales and key account management process 29% 25% 6% 20. Deep product / service knowledge 15% 16% 4%
10. Negotiation skills
57%
73%
31%
34%
11. Leadership
72%
54%
49%
27%
15% 4. Influencing skills
22%
How supplier management is resourced (all respondents)
53% 46% 12. Identifying non-traditional areas of value (other than cost savings) 9% 50% 13. Market and category knowledge 35% 18%
71%
31%
11% 5. Cross functional working
17% Part time and combined with broader operations and/or service management responsibilities
70%
37%
20%
39% Full time dedicated supplier managers responsible for more than one relationship 4% Full time dedicated supplier managers responsible for one relationship
32% Part time and combined with broader category management and/or sourcing responsibilities
drive the development of supplier management roles. We find that just over 55% of companies have defined the central relationship management role. When we look at the feedback from global Leaders, this figure is over 93%. However, it’s not just the relationship manager that interacts with suppliers. Others will have regular contact with suppliers at an operational or other level and will need part of their role defined to cover these interactions. These roles have been defined by only 44% of companies, with this rising to 73% amongst Leaders. Having defined the supplier management role, the next step is to determine the skills and competencies required to fulfil the aims and objectives of the position. This generally requires a skills and competency framework to be developed. This work has been completed by just over a third of all respondents, but amongst Leaders this increases significantly to 77%. With the required skills and competencies developed, it should
be possible to design specific job descriptions that reflect the
3 in 4 Leaders are creating still report no activity in supplier management people development. dedicated supplier management roles form has been provided by 37% of respondents, but by a much higher proportion of Fast Followers (55%) and Leaders (88%). An indicator of the ongoing challenge that has been evident for many years is that almost 1 in 5 companies identify training needs based on the competency assessment. This activity is performed by 74% of Leaders. For some, people development is just the training element. Yet, it’s actually a process that relies on the completion of a number of activities to ensure that when the training step is reached, it is adequate and targeted to the needs of both the individuals and the business. Supplier management training in some
organisation’s delivery model for the role, describe the responsibilities and accountabilities in more detail, and include the required qualifications, skills and competencies. This has been done by 75% of Leaders but by just 39% of respondents overall. The next step is understanding how current or prospective job holder’s skills and competencies compare to the role’s requirements. This is done through an assessment process that can support both recruitment and personal development. Completing such an assessment is the biggest gap in the people development process, having been conducted by fewer than 1 in 5 companies. It is also the biggest gap among Leaders, where just 66% have done so. Having invested time and effort in a competency assessment, the output needs to inform a personal development plan, including operational and personal development objectives, an element of which will
7% No clear ownership
Firstly, its positioning in the organisation. Supplier management has always been and remains largely in the precinct of procurement, both in terms of process ownership and execution. This is reflected in the feedback that procurement functions (centralised and decentralised) execute supplier management in around 65% of the companies taking part in our research. This is compared to the next most popular option where about 20% say it is done by a business function outside of procurement. Only 9% of companies currently report having a stand-alone supplier management function. This model does not vary significantly across Leaders, Fast Followers and
Followers, although the majority of organisations with a dedicated function are Leaders. When it comes to resourcing, we have seen an increasing trend to make the role dedicated rather than combined with category management, sourcing or service management. Currently, almost 45% of companies have created dedicated supplier management roles. In the case of Leaders, this increases to 74%.
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