TECHNOLOGY
TECHNOLOGY
The elements of the supplier management lifecyclemost often enabled by technology (all respondents)
The chart [left] indicates which aspects of the supplier management lifecycle are most frequently supported by a technology solution. The elements most often enabled by IT remain those you would expect – supplier on-boarding and contract management. These are the longest established solutions and are in place for around 60% of companies. After this comes a significant gap. The next largest figure is the 35% who report having systems in place for performance and risk management. Less than one in five companies are using technology to help manage relationships, information and collaboration. At the same time there remains a high degree of reliance on desktop tools such as spreadsheets and shared drives to capture, manage and share supplier information for more than 50% of companies. This is often the legacy of procurement professionals responding to the lack of an IT strategy and building solutions to try to manage the business. As laudable as this might be it is not a substitute for a proper procurement IT roadmap. Some regional variation to the adoption of supplier management technology The only regional difference of note is for Australasia where, on average, companies are 10% less likely to have invested in supplier management technology compared to Europe and North America and 15% more likely to be using desktop tools.
opinion State of Flux An important consideration when planning investment in
Contract management
62%
Supplier on-boarding/master data
60%
We predominately use desktop tools such as spreadsheets and shared drives etc.
51%
So why the apparent reluctance to invest in technology? Our research captures data from a range of companies across different industry sectors and each year around 20% to 30% of the companies change. Consequently, since 2009 we’ve had more than 2,000 separate companies contribute to this research. What this has revealed is a sustained under investment in technology to support supplier management. To get to the root cause we need to look beyond just the numbers for technology and think about what’s happening elsewhere in SRM programmes.
Performance management
34%
Risk management
33%
Relationship management
16%
CSR / sustainability management
• VALUE – too few organisations are developing a value proposition that effectively acts as the business case for SRM. Without that it will be that much harder to make the case for a technology investment. • ENGAGEMENT – strong and active engagement from senior stakeholders is more likely to result in the prioritisation of SRM and unlock access to funding for IT investment. • GOVERNANCE – effective performance, contract and risk management is sadly missing for many companies. Clearly this isn’t only down to technology (or lack of it) but it will certainly be a contributory factor. Covid-19 has revealed a new risk landscape and has brought into focus the role of technology.
15%
We don’t currently use any technology to manage the supplier management lifecycle
supplier management technology is not to come up short and risk the programme outgrowing its technology.
8%
Innovation management
7%
• TREATMENT STRATEGIES – essential to focusing more effort and resource on genuinely strategic suppliers will be the ability to automate more of the routine and repetitive tasks. Implementing technology is not just about its functionality it’s also about driving change and consistency of supplier management across the whole organisation. Organisations need to re-evaluate the description of “adequate” as being sufficient when it comes to their supplier management technology. For too long procurement has been content to focus on sourcing tools and get by as best they can post-contract. It’s time to learn the lessons of other functions and use a compelling SRM value proposition to push the case for more investment in technology.
Key to focusing more effort and resource on genuinely strategic suppliers will be the ability to automate more of the routine and repetitive tasks, such as data capture and reporting.
Snapshot analysis
There is much talk of procurement technology roadmaps but these often stop short of properly addressing the post-contract supplier management phase. The processes are not always fully defined and therefore the business case for investment is not as clear cut and easy to measure as it is for sourcing or P2P solutions. An important consideration when planning investment in supplier management technology is not to come up short and risk the programme outgrowing its technology. Consider a modular solution that will grow with your programme.
68 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
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