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A lot of time is spent trying to understand the benefit that suppliers get from being part of an SRM programme. Here we asked the buy side what benefits they believe their suppliers are deriving from SRM. We also asked the sell side what benefits they believe they are actually getting by participating in SRM. Convergence of views is indicated by points within the diagonal shaded area of the chart below, running from left to right. While there is agreement on some benefits – notably sales and revenue growth – there is also a significant gap between what the buy side think and what the sell side experi- ence in some benefit areas. An example is receptive customers for innovation where the sell side rank this as the third most frequent benefit but the buy side believe it is the benefit that suppliers receive the least. This buy side perception correlates with feed- back featured elsewhere in this report on the poor management of supplier innovation.
Figure 1.10. Comparison of supplier benefits – buy / sell
BUY
1. Cost efficiencies 2. Sales & revenue growth 3. Improved margins
4. Increased productivity 5. Marketing opportunities 6. Improved decision making 7. New business (with customer) 8. Access to new markets 9. Transfer of skills and knowledge 10. Sharing R&D 11. Sharing investment & risk 12. New business (other customers) 13. Client reference 14. Receptive to innovation
SELL
For relationships to thrive, it is essential that some degree of mutuality exists. Clearly the compensation that suppliers receive for the provision of products and services is part of the contract. In some cases, further incentives are embedded in the form of gain share agreements. Although, these are often less effective in stim- ulating a broader approach to creating value and are not fully exploited due to poor contract management. However, it is clear that if suppliers are to be engaged and expected to positively contribute to increasing value they need to be incentivised. Our research leads us to believe that incentives do not always need to be strictly financial. In the section relationship development and culture, we will explore what suppliers value from relationships in more detail and how a good understanding of this might help create more mutuality.
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