INTRODUCTION / FOREWORD
Method sparks supplier innovation – not magic E veryone knows it when they see it, yet innovation is slippery when you try to define it. Nonetheless, any organisation trying to
beating CRM platform, discusses how software has helped improve customer management, and how the lessons can be applied to SRM. But supplier innovation is not all about suppliers. On pages 6-7, North Carolina State University supply chain management professor Robert Handfield, who has literally written the book on supplier innovation, says internal business leaders hold the keys to successful collaboration with suppliers – but can be prone to slamming the door if not managed carefully. The US Postal Service, Lloyds Banking Group and Premier Oil also lend their experience of improving business performance with SRM, as do Australian firms Narta and Stanwell. In addition we provide our own perspective on the many and varied attributes of successful SRM programmes. As new technologies and economic challenges threaten businesses around the world, there has never been a greater need for supplier innovation to help secure the opportunities that come with the territory. In such a world, procurement should not be known only for running RFPs and administering contracts. We can all learn from the experience of the companies we have brought together in this report. Now is the time to start applying the lessons.
innovation. Now in its 11th year, the report is based on a survey of 402 companies, a 32% increase on the previous year. It is also crammed with insight from leading researchers and business executives in the field. Company directors now have an appetite for supplier innovation, says Sir John Hood, who has sat on the board of global companies, as well as serving as vice-chancellor of Oxford University. Procurement teams will no-longer impress with the savings narrative alone, he says. State of Flux has found that companies which engage suppliers pro-actively and work with them on innovation will be regarded as customers of choice. Equally being a customer of choice and a supplier relationship management leader means you are 3 times more likely to receive innovation from your suppliers. relationship management. On pages 8-9 Europe purchasing director Jean- Christophe Deville describes how the world’s largest automotive firm is striving to accelerate innovation with new sets of suppliers. Organisations should not simply wait for supplier innovation to magically appear out of thin air. They must develop a method for creating a Toyota has been recognised as a standard-bearer for supplier pipeline, just as sales and marketing departments create a funnel for sales leads (see State of Flux analysis, p4). Then supplier innovation can be captured using business technologies, in the same way CRM has been used to manage customer accounts. On pages 76-78, Hubspot, the creator of a world-
innovate needs to agree on a definition before they can achieve their goals. If they cannot say what they want, they don’t have much hope in getting it. The problem in defining innovation is we are drawn towards shiny objects: new products that dazzle consumers; start-up companies that transform markets; technologies that change lives. While these are examples of innovation, they only represent a small set of circumstances in which innovation is necessary: businesses need new thinking in risk management and efficiency, as well as a way to accelerate growth. Established suppliers can help fulfil all of these needs, but only if you manage them in the right way. Welcome to State of Flux’s 2019 SRM report, which focuses on supplier Organisations should not simply wait for supplier innovation to magically appear out of thin air. They must develop a method for creating a pipeline, just as sales and marketing departments create a funnel for sales leads.
Alan Day Chairman & Founder State of Flux
2019 GLOBAL SRM RESEARCH REPORT
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