INTRODUCTION
INTRODUCTION / FOREWORD
54 People
The time is now
Contents
64 Technology
03
Time is now
04
Accelerate your transformation
I t’s been a strange and challenging year, to say the least. If ever there was an event to demonstrate the interconnectivity of our global supply chains – and the vital work done by procurement to keep them running – it’s Covid-19. The pandemic has also highlighted just how much organisations depend upon their suppliers. Those who will have fared best will be the ones with strong relationships, who are viewed as a ‘customer of choice’ by their partners. It is they who have had access to goods in short supply, negotiated arrangements to free up cash, flexed their logistics and adapted their offering to mitigate risk or even seize an opportunity. With the support of their suppliers they’ve quickly adapted, pivoted and responded to this crisis. The pages of this year’s State of Flux report, the 12th we have published, are rich with examples of buyers who were able to call on their suppliers for help – and fast. From Melbourne City’s ability to source much-needed hand sanitiser, to Uber’s vendors helping with costs to get it through a tight time for the travel industry. Now, more than ever before, procurement has the opportunity to make the case for SRM to ensure organisations don’t just survive, but thrive.
We currently have a ‘just do it’ culture and we need to retain it. We must reinvent the whole profession as an agile business coach, focused on opportunity and risk: The opportunity to move at speed reinventing supplier relations for a new era and creating more value, or the risking being left behind. As we contend in these pages, business leaders should keep ‘supply chain’ on their daily dashboard in future – not because it’s in crisis but because it’s delivering strategic advantage. If the global economy is to recover and move forward, procurement and supply chain needs to renew supplier relationships to be more collaborative at all levels. Now, more than ever before, procurement has the opportunity to make the case for SRM to ensure organisations don’t just survive but thrive. It should grab that chance with both hands. And finally, I want to thank all those who took part in this year’s survey. Despite it being a particularly busy and uncertain time, we experienced one of the highest responses yet, for which we are very grateful.
Everyone from Dutch telecoms company KPN, to Hitachi Rail, to sailing Olympian Sir Ben Ainslie articulate instances of close working links with key suppliers making a positive impact. In each case it’s not the contractual stipulations that have made it happen, but the collaborative relationships between the people in those businesses. And while there are some indications of progress – such as a higher proportion of companies meeting the Leader criteria of our maturity model (17% this year, up from 10% in 2019) – it remains clear that too few companies are good at supplier management. The good news is the current spotlight placed on supply chain has provided the world’s biggest business case for investment in supplier management. The time is now to make that case. Cynics often argue that organisations cannot change. But they can, and do – sometimes surprisingly quickly and speed is the theme we focus on this year. As the world’s fastest female motorcyclist Leslie Porterfield tells us (on page 8) business needs and demands change. The pandemic has shown that organisations are, in fact, capable of rapid operational change should it be required. What’s more, there is also now the will to do it. Our latest study reveals an increase in executive support and buy-in for supplier relationship management – an indicator that had previously been in decline. Procurement and supply chain currently has the ear of the entire organisation and it must capitalise on that and move quickly on things that were previously hard and slow to achieve.
08
Speed takes time
10
Bringing business together
74 Collaboration
12
About SRM, State of Flux and our research
16
Six Pillars of SRM
18
Summary of key findings
20
Value
30
Engagement
20 Value
40
Access the best to beat the rest
44
Governance
50
Relationships are rooted in values
54
People
64
Technology
30 Engagement
74
Collaboration
80
The power of teamwork
86
Covid
Alan Day Chairman & Founder State of Flux
94
Summary
44 Governance
95
Call to action
96
About State of Flux
2 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
3
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