VALUE
VALUE
Main non-financial benefits reported (all respondents)
Developed and documented a clear value proposition and/ or business case for SRM
This figure is lower than 2019 (48%) but still represents a risk to the continued support for SRM in companies needing to reprioritise resource. The importance of being able to measure benefits is reflected in both the steps that SRM Leaders take and what they are achieving. Leaders are more advanced in identifying and tracking benefits as supported by the feedback that only 15% report difficulty in quantifying benefits as a serious barrier, compared with 30% of Fast Followers. Add to this the 49% of Leaders reporting financial benefits in excess of 4% compared with 34% of Fast Followers. However, these two figures compare very favourably against Followers, where only 15% are seeing returns in excess of 4%. Arguably non-financial benefits continue to be a richer source of value from SRM. Results this year continue to demonstrate that SRM casts a wide net to capture different types of value from ‘Supply chain risk reduced’ reported by just over 59% to ‘Improved speed to market or project implementation’ reported by 16%, different organisations are looking for and achieving a range of different types of value. It should be remembered that the rate with which these benefits are reported does not diminish the individual impact they have on each of the businesses where they occur.
opinion State of Flux Leading SRM programmes will explore value beyond the traditional remit of procurement savings and seek to align strategic objectives and drive collaborative initiatives.
Supply chain risk has been reduced
54%
Leader
Fast Follower
Follower
Quality and service improvements were made
Yes
88%
48%
68%
36%
You received more supplier innovation and continuous improvement
No
40%
9%
24%
Improved supply continuity
52%
37%
2% Don’t know 7% 11%
Organisations that excel in SRM have developed a clear appreciation of the value that more collaborative supplier relationships can bring. Leading SRM programmes will explore value beyond the traditional remit of procurement savings and seek to align strategic objectives and drive collaborative initiatives that capitalise on innovation, improve
Your most strategic/critical suppliers are more willing to accept and manage risk
36%
Regulatory compliance is better assured
29%
performance and reduce risk. There can be no doubt that the shockwaves created by the Covid-19 pandemic put the spotlight on supply chain risk management and supply chain resilience in a way that no other event has. Even though our research was conducted relatively early in 2020 it was clear that risk management and supply chain resilience were being exposed as both strengths and weaknesses and resulted in more companies than ever putting them on their SRM ‘to do’ list. To find out more, view our Risk management webinar on our website. The importance of the SRM value proposition cannot be
You have benefitted frompreferential pricing
20%
Helped you achieve your sustainability goals
17%
Speed to market or project implementation was improved
16%
Other
13%
overstated. It represents the ambition and focus for developing more collaborative and productive relationships to both initiate the programme and check what it’s delivering. For more information on the SRM value proposition, watch our webinar ‘Why an SRM business case is essential’. The challenge of quantifying and reporting benefits has yet to be overcome by many and yet it should be relatively straightforward. All post-contract savings are generated by the relationship you have with the supplier in question. If that relationship is adversarial and opportunistic and savings are ‘extracted’ then neither they nor the relationship is likely to be sustainable. If the relationship is collaborative then savings are more likely to be derived from ‘real’ cost reduction and the relationship is likely to develop and continue to generate value. In either case, the quantification and reporting of benefits should be simple – anything achieved post-contract is as a result of the way in which the supplier relationship is managed. The challenge is to manage that relationship – including cost reduction conversations – in a responsible and collaborative way.
Snapshot analysis
Speed An opportunity that remains underrepresented in our feedback is the impact that improved and more collaborative supplier relationships can have on speed to market and the competitive edge that that can create. Speed to market doesn’t just mean getting new products on the shelves more quickly, it also means getting projects delivered faster, reducing cost and delivering the benefits sooner.
Organisations that excel in SRM have developed a clear appreciation of the value that more collaborative supplier relationships can bring.
24 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
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