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EXECUTIVE SUMMARY
Once again, the vast majority of companies are reporting progress in developing, embedding and gaining benefit from their SRM programmes. However, some serious challenges remain.
The barriers to progress are much the same as previous and are focused around limited budgets, distractions caused by business change and insuffi- cient stakeholder engagement. Innovation remains a challenge as it is once again reported to be making slow progress. There are clear indications that SRM will become more important in the next 12 months and beyond, with it making a more important contribution to key strategic objectives.
The focus of SRM remains split between programmes that put more emphasis on contract and performance management to assure the value negotiated in contracts is delivered, and programmes that build on those foundations but are looking for more collabora- tion with suppliers to create new value. The areas showing the most improvement are now more related to outputs such as trust and collaboration. The areas making the least progress still include some of the key enablers for successful SRM, such as invest- ment in training, and information and technology.
BUSINESS DRIVERS AND VALUE This year, risk has been identified as the most important business issue driving invest- ment in SRM. While cost reduction and cost avoidance remain priorities, customer of choice related business drivers have also gained in importance. The level and range of tangible benefits are increasing, notably in supplier service levels, supply chain efficiency, impact on profit margins, risk reduction and cost avoidance. Leaders are almost twice as likely to be experiencing benefits in areas such as sustain- ability, access to the best supplier resource, and joint product or service development. Benefits being delivered are well aligned to the business drivers, although this may well be serendipitous, as little seems to be done to ensure a clear line of sight between SRM value and business objectives. Around 25% of respondents (34% of leaders) report post contract SRM related benefits to be worth 6% or more of the contract value. However, capturing and reporting benefits remains a challenge, with 32% of respondents not knowing what the benefits are. The gap between leaders and followers reflects the trend in previous years. It continues to grow both in terms of direct financial and non-financial benefits, and indicates the link between the investment leaders are putting into their SRM practices and the results they are achieving. Customer of choice discretion is certainly exercised by suppliers, as evidenced by the descriptions of the benefits received on the buy side and provided by the sell side.
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