ENGAGEMENT
37% of SRM leaders receive strong and active support from senior management 85% of leaders see support for SRM among business and operational colleagues 37% of leaders say suppliers show a strong and active engagement with SRM
SUMMARY The proportion of organisations reporting strong and active engagement in SRM from the senior management team is down on previous years. Yet SRM leaders are three times more likely than followers to achieve this level of engagement: clearly that leaves room for improvement among the rest of the pack. Engagement with suppliers is another strong indicator of SRM leadership: 37% of leaders say suppliers show a strong and active engagement with SRM, more than three times the proportion (11%) seeing that level of supplier engagement among the follower group. Yet both groups could aimhigher. One easy way is through a systematic effort to listen to the voice of suppliers. Leaders are the only group in which the majority gather structured feedback from suppliers. Barriers to engagement are stubborn. Simply put, other priorities too often come before SRM. But SRM helps meet business goals. It can boost performance on time to market, working capital and cost reduction, to name a few. Tapping into these priorities offers a route to business engagement.
Day-to-day relationships are built on small interactions between suppliers and operational and business management within the buying organisation attention of senior managers. Since SRM leaders aremore effective in creating a value proposition for SRM, thismay explain why they aremore successful in to engaging senior management. SNAPSHOT ANALYSIS Senior managers are busy. They don’t have time for seemingly abstract terms such as SRM. But we find that expressing SRM in concrete business terms is an effective approach to gaining the The transport sector is most likely to struggle with SRM engagement. It is the most likely to witness strong opposition and resistance to the activity, according to 6% of respondents. No other sector experienced this level of resistance. SRM STRUGGLES FOR OPERATIONAL ENGAGEMENT As we highlighted earlier, day-to-day relationships are built on small interactions between suppliers and operational and business management within the buying organisation. It is concerning that these individuals are less likely to support SRM. 21% of leaders say business and operational colleagues support is strong and active
Even among SRM leaders, the proportion of respondents citing support from this group (21%) is less than the proportion of senior executives (37%) supporting SRM. Perhaps operational colleagues are not sufficiently aware of, or involved in, SRM programmes to give them their support. Clearly, leaders, followers and others all have work to do engaging more with business and operational colleagues. They all report a significant minority-14%, 17% and 21% respectively - showing strong opposition and resistance. None of the SRM leaders responding to our survey see resistance to SRM from senior managers. This is clearly a differentiator in successful SRM. SUPPLIER ENGAGEMENT A STRONG FACTOR IN SRM LEADERSHIP It is not only people inside the business that SRM needs to engage. Getting suppliers on board is also vital to achieving the benefits its advocates promise. Suppliers will need to buy into any newmeasures of their performance or plans to achieve greater value from the relationship.
Suppliers are the key to the delivery of a company’s strategic and performance objectives and the source of innovation and new value. Without their strong and active engagement, value cannot be created. If key suppliers are not engaged then far from the relationship representing an opportunity, it actually represents a risk. Our research shows a marked difference between SRM leaders, followers and other respondents in how they engage suppliers. Among leaders, 37% say suppliers show a strong and active engagement with SRM, more than three times the proportion (11%) seeing that level of supplier engagement among the follower group. Only 6% of others see the highest level of engagement, while 8% see some opposition. Comparison between SRM leaders, followers and others shows that gaining support and engagement from suppliers for SRM programmes is vital to improving the chances of success.
strategy and direction, they control budget and resources. Unless they are on board, SRM has little chance of success. In our study we see some significant variance in stakeholder engagement with SRM across industry sectors. Considering the top five industries responding to our survey, we see the IT and high-tech industry has the largest proportion (19%) declaring strong and active support for SRM. Cross-referencing our data, we can also see that, when compared with other sectors, the IT and high-tech sector is: most likely to have developed and documented an SRM value proposition; most likely to be reporting both financial and non-financial benefits; and most likely to be reporting financial benefits in excess of 6%. Barriers to engagement are stubborn. Simply put, other priorities too often come before SRM
Phone calls, emails and face-to-face exchanges between the vendor and the business are the substance of supplier relationships. More often than not, procurement is not present. Although the purchasing teammay help find, chose and negotiate with suppliers, the relationship is lived by people in the business and people within the supplier. Warehouse managers, accountants, sales people, R&D and IT managers are just a few of the roles influencing and experiencing supplier relationships. They determine if the relationship is healthy and productive – or unhealthy and fractious – so their engagement with SRM is fundamental to its success. So is the participation of senior executives, who need to buy into the value proposition, understand the business case and, ultimately, provide the funding. Our research shows that leaders in SRM are three times more likely to achieve strong and active engagement with senior managers and executives than followers. However, the overall proportion of companies reporting strong and active engagement is down on previous years, from 20% in 2016 to 13% in 2017. Leadership is essential to achieving successful SRM outcomes. The senior management and executive team set the
SRM LEADERS ENJOY SENIOR-LEVEL ENGAGEMENT
Leader
Follower
Other
THREE IN FOUR BUSINESSES SAY THEY ARE LOOKING FOR SUPPLIER INNOVATION Fig 11. How engaged and supportive of SRMare your senior management and executives?
NEARLY ALL BUSINESSES OFFER SUPPLIERS AT LEAST SOME GUIDANCE ON INNOVATION
0
10
20
30
40
50
60
%
Strong and active engagement and support
Supportive
Neutral
Some opposition
Strongly opposed / resisting
32
33
ENGAGEMENT STATEOFFLUX 2017GLOBAL SRMRESEARCHREPORT T STATE OF FLUX GL AL SR RESEARCHREPORT
ENGAGEMENT STATEOFFLUX 2017GLOBAL SRMRESEARCHREPORT
Powered by FlippingBook