2017 Global SRM Research Report - Solving the value Puzzle

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suppliers achieve their tactical and strategic goals.

Even among leaders, there is considerable room for improvement when it comes to listening to the voice of the supplier. Among the tools supporting SRM, it is one of the simplest and most effective to deploy. ‘OTHER PRIORITIES’ ARE THE GREATEST BARRIER TO SRM ENGAGEMENT Of course, engaging internal stakeholders and suppliers is not always straightforward. Some do not want to be engaged. Among all groups, the greatest barrier to engagement with SRM occurs when it becomes eclipsed by ‘other business priorities’. It is understandable. Chief marketing officers are not judged on their relationship with suppliers, nor are CIOs. Given the metrics most stakeholders, and suppliers, are judged on, SRM will always face this hurdle. To overcome it, procurement teams need to use SRM as a tool which helps stakeholders and

Part of the process in engaging suppliers involves gathering a systematic, frank and fair assessment of the working relationship with the buying organisation. Many suppliers offer ad hoc feedback but buyers seldom act on it. A more methodological approach to listening to the voice of the suppliers puts the buying organisation in a position to address the recurring themes that suppliers highlight. It also indicates a positive engagement with suppliers and helps suppliers understand that the buyer is serious about SRM. Many companies use the feedback as a catalyst for change: it informs the value proposition and business case for SRM. Leaders are the only group in which the majority (59%) gather structured feedback from suppliers. Meanwhile the majority of remaining organisations (i.e. others) do not get structured feedback.

OTHER PRIORITIES CREATE BARRIERS TO SRM ENGAGEMENT FOR ALL GROUPS

Among the other barriers to SRM there is some variation between leaders, followers and the others. Only 16% of leaders are likely to see insufficient awareness of the SRM value proposition as a barrier, while 22% of followers and 28% of others see it as a barrier. Over the years, State of Flux’s clients have demonstrated that SRM affects real business outcomes. Yet overall, stakeholder and supplier engagement in SRM is falling. Procurement departments can see this as an opportunity. Outside SRM leaders and followers, the majority of businesses do not see positive support for SRM among senior managers. Winning these senior teams over will be an effective approach to improving supplier relationships, and ultimately, performance.

Part of the process in engaging suppliers involves gathering a systematic, frank and fair assessment of the working relationship with the buying organisation

% of respondents

Fig 16. What are the biggest barriers tomore 'C' level support and engagement in SRMwithin your organisation?

Other Follower Leader

Insufficient awareness of the value proposition

Procurement and supply chain is not high enough on the corporate agenda

Difficult tomake a compelling business case

This year’s fall in stakeholder engagement is a shock. The performance of leaders makes it clear: engaging the senior team, operational managers and suppliers is crucial to SRM success. A failure to do so is a step backwards. We recommend extending the set of stakeholders engaged with SRM, particularly in the sales and market development side of the business. For internal stakeholders to pay attention, SRM teams need to show how the programme is aligned with the overall business growth strategy and not just a cost or risk exercise. Start with building a value proposition and stakeholder management plan and implement a process for regular dialogue with key business stakeholders. On the supplier side, engage more with a broader set of stakeholders, importantly, in innovation and R&D teams. When possible, include meetings between respective CEOs in the governance framework, as they can produce large strategic business opportunities. Entrepreneurial SRM teams can facilitate development of new products or access newmarkets by promoting discussions between stakeholders across organisations – for example, between their marketing and sales departments and the suppliers’ R&D function. Without an engaged supplier and stakeholders these ideas are hard to come by. It’s a business opportunity that should not be overlooked.

IN THE NEXT SECTION... Support for SRM is one thing; delivering a programme is quite another. To do so, organisations require strong governance. We will see whether they have it in the next section.

Other business priorities

Disagree with the concept

3 3

No barriers - our 'C' level is fully committed

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