COLLABORATION
COLLABORATION
Customer of choice benefits
unless the relationship is fit. That’s why we believe that embedded in every SRM programme should be a 360° relationship health check. Conducted towards the start of the strategic engagement it will provide a baseline for the relationship and identify what’s working and what isn’t. If a number of areas aren’t working as they should be, the chance of delivering on your joint goals and objectives is limited. When we asked how many companies conduct just such a health check as part of their SRM programme the answer was only 45%. This figure increased significantly amongst Leaders where it’s close to 86%.
Customer of choice
opinion State of Flux Leaders are almost twice as likely as Followers to be developing shared goals and objectives with suppliers.
The subject of ‘customer of choice’ has divided opinion for many years, going back to even before we made it the theme of our 2014 report. Today there is little doubt that as a concept it exists but the debate continues about where, why and how it manifests itself. What is clear is that many organisations are coming to realise that they are not a customer choice for as many of their key suppliers as they should be if they wish to minimise risk and maximise benefits. When we last asked organisations to self-assess their status as a customer of choice for their key suppliers in 2017 it emerged that just over half believed they held this status for more than 50% of their key suppliers. In 2020 little has changed with 57% of companies believing they are a customer of choice for more than half of their key suppliers. This is where the more developed SRM programmes of Leaders are reaping rewards. In this cohort almost 80% are confident that they are a customer of choice for more than half of their key suppliers.
Leader
Fast Follower
Follower
Improved account management
64% 63%
41%
More supplier executive focus and engagement
63%
49%
35%
Access to the suppliers best people and resources
The approach companies take to supplier relationships as they emerge from the shadow of the coronavirus pandemic will be critical. In many cases relationships were just reaching a level of maturity where collaboration was becoming an established way of working. We believe that to regress at this stage and to stop investing in these relationships would be a mistake. Instead, organisations should be accelerating and expanding collaboration to ensure that the capability and commitment of customers and suppliers is harnessed to help the recovery of all.
59%
52%
Collaborative innovation
28%
We know from numerous conversations and the evidence of this research that organisations are actively seeking supplier innovation. Successfully implemented supplier innovation has to be one of the best examples of effective collaboration. It requires a great number of moving parts to be organised and coordinated to get an innovative idea from the whiteboard to the customer. Despite its position as a key goal of SRM it still fails to be the flagship benefit. This year, as in others, it’s declared as a primary business driver (by 44%) and 41% declared it as a significant benefit, but only around half of these were the same companies that listed it as a key business driver.
Preferential pricing
56% 55%
46%
More commitment ‘the supplier will always go the extra mile’
Unless proactively encouraged and focused, collaboration is in danger of remaining a ‘nice to have’ when things go wrong but doesn’t become embedded as ‘what we do’. The most effective way to drive collaboration is to define its purpose via shared goals and objectives. And then work together to create a plan that requires collaboration to deliver. Collaboration doesn’t mean doing everything 50/50 but it does mean open and
52%
49%
39%
Customer of choice benefits
First look at innovation
While it has to be acknowledged that some customer of choice benefits are difficult to quantify, the consistency with which they are reported points to them being very real. These are most frequently reported by Leaders and Fast Followers and include, improved account management and executive focus, which was reported by around 65% of Leaders, and extra commitment, where the supplier will go the ‘extra mile’, which was reported by more than 50%. Other benefits of being a customer of choice are more tangible, such as, access to a supplier’s best people and preferential pricing, which was reported by 59% and 56% of Leaders respectively.
44%
40%
19%
honest communication, information sharing and the acceptance of collective responsibility. The ambition to drive much higher levels of innovation remains a goal that companies find hard to achieve. If the benefits of supplier-enabled innovation appear so clear, why are so few firms able to capitalise on them? From Toyota to Procter & Gamble, successful models of supply and value chain innovation have long been thoroughly researched and documented. Software platforms to manage innovation, including our own SupplierBase hub, can bring automation, ease and speed to the process. Yet the fact remains that the results in ours and almost every research report is that there is a significant gap between innovation expectations and performance. We know that supplier innovation is ranked the most important SRM outcome after risk and cost reduction and most executives believe innovation is important for the future success of their organisations, and is among the top priorities for their businesses. It’s also clear that executives are not satisfied with the innovation results their organisations’ are achieving. Download our white paper Collaborative supplier innovation – Unlocking the benefits.
Market insights and intelligence
43%
31%
23%
Preferential access to scarce products, materials or capacity
Snapshot analysis
38%
31%
16%
While we can speculate about being a customer of choice there is no substitute for just asking the question. Not directly (suppliers will only ever tell you “of course you are”) but indirectly via a number of questions that allow suppliers to provide honest feedback on their experiences in dealing with you as a customer. Find out how by emailing enquiries@stateofflux.co.uk
Other
2%
4%
8%
Are your relationships fit for collaboration?
Developing collaborative and more productive relationships is a real challenge. While you might think there are a hundred and one opportunities to explore and deliver with your strategic suppliers you’re unlikely to succeed
78 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
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