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What are the most significant challenges the programme has faced? There are numerous challenges but I think the big- gest of all is to communicate the value, as it not always tangible at first. Everybody is very busy but it is important for everyone to see the value of their efforts realised. Suppliers themselves reinforce this value constantly. It is our job to make sure the message is carried throughout the organisation. The second challenge I would say, is the technology it takes to pull all that information together. I have been very fortunate to have a small team that supports me. We are currently working on a better technology solu- tion which will be a great help. Continuous marketing of SRM and its value to the busi- ness is a challenge as well. Our supplier days help on this front, when the suppliers meet with our executives and promote the benefits of the approach themselves. I’ve never had a supplier say ‘look this doesn’t add any value to me’. In most cases suppliers would pay to get this level of information and engagement. What are the most successful features of the programme? We see successes all over and they vary significantly. When we were segmenting our suppliers we were very clear with them about the level at which they were positioned. As a result, we have a much better align- ment of expectations for both sides. We have seen examples of suppliers responding very positively to the investment we put into engaging with them in this manner. One of our suppliers said to us, “you investing in us and keeping us top of mind means we’ll do the same thing for you”, and we have seen that happen. Having performance data has made a huge difference. Conversations with suppliers are very different. They have a much better business structure because we have put something in place that generates a different thought process. When you start providing direct feed- back, your suppliers get involved and they start asking what they need to do to become better, so their conver- sations with stakeholders are very different. The more I think about it, the more convinced I am that it’s the information that makes the difference. I know that changed attitudes and behaviours are also key, but without information you have little to work with. We now provide information that then becomes the stone we throw in the pond, that then ripples out and has an impact around the business.
In 2004 you started to get the executive engagement. Is that with the upper tier of strategic suppliers? Yes, we hold annual supplier days which include a reception the night before for themost strategic suppli- ers, where theymeet a number of our senior executives. On the actual day we have a structured series of meet- ings that start with a strategy presentation from our executives followed by department meetings facilitated by relevant vice presidents and one on one meetings. These meetings rapidly bring top level strategy down to a practical level. Other meetings and operational reviews take place with strategic suppliers, sometimes at a senior level on a less formal basis. How do you approach the segmentation of your supplier base? We work with the business to segment our supplier base into four groups. Our highest designation is strategic, followed by key suppliers, operational and finally transactional. We use a set of segmentation criteria that have a number of consistent features, along with the flexibility to accommodate different business needs. We have defined the general treat- ment strategies we believe are appropriate to each group. For our strategic, and a number of our key suppliers, this includes attendance at our annual supplier day. All suppliers in the strategic, key and operational groups are managed operationally on a day-to-day basis at plant level, but we do a more for- mal performance assessment three times a year. What operating model have you adopted for SRM and how many people are involved? Our approach is for managers in procurement to main- tain the relationships. There are a small group of our raw materials suppliers that can do extremely innova- tive things that are managed out of our research quality and technology group. However, we adopt a team approach and they work very closely with us, because in the end we maintain the relationship within procure- ment. I know that people debate that and I see merit in the argument to position SRM more in the business. However, we believe that having the relationship man- aged here in procurement works better to promote a single interface and consistent communication. Is that a dedicated role or is it combined with the sourcing role? We combine SRM with the sourcing role. Again, I know opinions vary on this, but we regard SRM as part of the end to end strategic procurement process and believe that involvement in, and a good under- standing of, current supplier relationships is vital to long term strategic sourcing.
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