SUMMARY
CALL TO ACTION
Call to action How successfully many organisations navigated the Covid-19 crisis was dictated by how well they managed their supply chain challenges and worked with suppliers of all shapes and sizes. Our advice is to seize this moment to learn from triumphs and failures alike and for procurement to drive positive and lasting change.
individuals. Not enough time and effort is directed at identifying and assessing the skills needed for SRM.
requirements for contract, performance and risk management and governance for each segmented group of suppliers and then drive compliance.
Summary
Gaps in governance remain
People development is a process
The temptation for some programmes is to skip the foundations of contract, performance and risk management, but this is a fundamental mistake. Supplier collaboration is built on trust and having good oversight and control of contracts, performance and risk is crucial.
Delivering training that is not targeted or clearly aligned to the needs of the business and the individual is wasteful both in terms of time and money.
No summary of 2020 can fail to acknowledge the profound impact Covid-19 has had, and continues to have, on every aspect of our lives, society and commerce. Supplier management has been central to mitigating risk and addressing the challenges supply chains have faced to maintain the flow of goods and services, keep the wheels of commerce turning and protect livelihoods.
― CALL TO ACTION 5
Technology remains the least developed SRM capability
Review the SRM role and determine the required skill set, then assess current capabilities against those skills before aligning challenging and creative training solutions.
― CALL TO ACTION 2
Overcoming the most common challenges
Our research consistently reveals the shortcomings of technology deployed to support supplier management. Typically it’s made up of the limited functionality in enterprise systems, some standalone solutions, with gaps plugged by desktop tools and manual processes. A large proportion of respondents say current technology is inadequate. Companies underestimate the role of technology as both an enabler of SRM and catalyst for change.
Put more time and effort into exploring the ways you can capture and report both financial and non-financial benefits.... and celebrate success!
The most frequently reported SRM challenges in 2020 were competing and changing business priorities, followed by organisational change and then a lack of budget and resources. We believe they all relate to the combination of the SRM value proposition and senior stakeholder engagement. If the value proposition is sufficiently aligned to the organisation’s strategic objectives then the senior stakeholder group has little choice than to be invested in SRM as one of the means to deliver that mission.
Senior stakeholder engagement has improved
Satisfaction with progress remains steady
Close the technology gap
There is now more senior buy-in for SRM programmes, reversing the downward trend of the past few years, but it’s not back to the high of 2016, nor is it as active as it should be. Business and operational support is steady, taking its cue from the senior group. Suppliers remain supportive but too few companies have regular supplier feedback as part of their management strategy.
Two-thirds report satisfaction with progress achieved by their SRM programme in the past year. A slight increase on 2019. Challenges encountered are familiar – competing and changing business priorities, organisational change and a lack of budget and resources – and potential strategies to tackle them have been outlined in this report. Risk dominates but wider value is still the prize The impact of coronavirus has confirmed a trend noted in previous years that risk management and ultimately, risk reduction is a primary business and value driver for SRM. While risk is the priority this year, businesses have not lost sight of broader value opportunities with cost optimisation and supplier innovation continuing to be a prized outcome.
Suppliers have the answer
Under investment in technology to support a process as vital as supplier management needs to end. For too long procurement and supply chain management has had to find workarounds for inadequate IT.
Want to gain a better understanding of how you are perceived as a customer? Want to know what you can do to become easier to do business with? Want to find out what you could change to make supplier interactions more efficient? Want to discover what you can do to become a customer of choice?
Collaboration is delivering
― CALL TO ACTION 6
All the evidence points towards collaboration starting as soon as organisations reach out. This is supported by feedback from those at the start of their SRM journey who report beginning to see the benefits of engaging more collaboratively with suppliers early on. While the initial benefits might be hard to quantify – such as increasing trust, transparency or improved account management – they will be key enablers for future value creation.
Create an IT strategy that enables game-changing collaboration with strategic suppliers and supports intelligent interaction while at the same time focusing on automating standard supplier management tasks.
Cast the value net wide
Segmentation is widespread but treatment strategies less so
― CALL TO ACTION 3
To appeal to the largest number of stakeholders the value proposition needs to explore the maximum number of opportunities and remain aligned to both the company’s strategic objectives and its business cycle.
Supplier segmentation is now accepted practice in almost all companies although too often the criteria used is limited and lacks alignment to business drivers. Consequently some suppliers that are important to the success of the organisation are not managed to the best effect. Too few companies are developing differentiated treatment strategies that bring segmentation to life and optimise supplier management.
Reach out to suppliers with a properly designed and administered questionnaire to gain genuine insights from a range of perspectives – and action the results.
Collaboration is not an end in itself
Stop ignoring the fundamentals
Collaboration is clearly a positive development in relationships but it must be seen to deliver value in ways – and in a timeframe – the business can see.
― CALL TO ACTION 1
Contractual compliance and risk management for both parties shouldn’t be optional. The SRM dividend of value over and above the contract will always be more difficult to achieve, and to some degree pointless, if value already thought to be secured via the contract is leaking away.
Revisit your value proposition, align it to your organisation’s strategic objectives and re-engage with stakeholders.
Covid-19
Capturing and reporting benefits
Experiences during the early stages of Covid revealed that relationships, communication and openness were key. They were highlighted as strengths that in some cases overcame process limitations. Most organisations believe the experience will lead to a re-evaluation of supplier management with programmes likely to be expanded and accelerated.
Invest more in people
― CALL TO ACTION 7
Proof in results
Many organisations still struggle to capture and report the benefits of SRM and much of the evidence is anecdotal. While many report good financial returns and significant non-financial benefits, too few can sufficiently quantify these and a substantial group can’t track them at all.
When investment in people is mentioned the tendency is to look at the size of the training budget and how many have been trained in x, y or z. However, people development is about more than training. It must be structured and reflect the needs of the business and
Pick the right suppliers to partner with and then push the accelerator (see page 4-7) to focus on relationship development, joint planning and value creation at speed.
Having made such a big thing of the value proposition with stakeholders don’t be surprised when they want to see results. Many companies that report having difficulty capturing and reporting benefits frankly haven’t been trying hard enough.
― CALL TO ACTION 4
Develop supplier management treatment strategies that clearly define the
94 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
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