59
KEEPING IT SIMPLE With strong sponsorship from the CIO and other IT leadership, a basic SRM framework was developed. This was piloted with a well established supplier where the existing relationship was very strong, and then launched formally with six suppliers in the IT, contract labour, software, hardware, and telecom categories. These suppliers were identified as tier one following a rudimentary and largely intuitive segmentation exercise, taking spend and business criticality (risk) into account. According to Mike Gonce, ‘keep- ing it simple’ was key, and also the strong leadership and involvement of the CIO who locked in supplier commitment via a ‘supplier charter’ letter, personally signed by each of the suppliers involved. “Being too rigid in the initial segmentation or in the framework can impede value and be a barrier to the launch of a successful SRM programme. We felt providing a simple tool kit and framework, and allowing a focus on letting the key issues drive each relationship was the right place to start. We knew that we could mature the process and grow the programme over time. It worked out perfectly for us.” Key elements of the initial framework included team orientation to ‘get everybody on the same page’ in terms of the approach and what needed to be achieved. A simple standard tool kit and programme level scorecard was developed with three basic measures: num- ber of suppliers, spend under management, and value created. Some other pieces in the initial toolkit included a supplier relationship scorecard, sample agendas, guiding prin- ciples, and a collaboration website. DEVELOPMENT Mike Gonce explained that the programme has matured since the early days and now encompasses 25 suppliers (with plans to add another five), resulting in ~70% of third party spend under management. The framework itself has also been developed with additional criteria added to segmentation that is refreshed annually. More structured training has been provided and treatment strategies developed for suppliers in four tiers. Mike was keen to point out that 100% of what Eastman classify as higher risk relation- ships are being pro-actively managed within the SRM programme. BENEFITS Eastman maintains that benefits from the programme are real and tangible. This is evidenced by lower cost, improved supplier responsiveness, improved service levels, and much improved collaboration and communication. Mike went on to explain a ‘softer’ benefit which he described as ‘relationship capital’. Relationship capital, like financial capital, is something that is built over time and drawn upon when needed. Fair and rea- sonable treatment will, in most cases, create a reserve of goodwill that can be drawn on when issues need to be resolved or extra effort is required. A healthy relationship capital balance has assisted Eastman in its call on supplier cooperation to help manage the integration challenges from its recent acquisitions. “When we think about innovation, productivity or sustainability, many times these come from, or can be enabled by, strong supplier relationships.”
A B C
Powered by FlippingBook