understanding what is important to your suppliers, how your organisation stacks up against these areas of importance versus your organisations key competitors. In parallel we recommend running a Supplier Management Diagnostic to look at current state versus the six pillars of supplier management, versus the desired or future state, creating a ‘roadmap’ for the change programme and giving you a point to measure progress against. In addition to being key measures, both serve as inputs into your supplier management value proposition and ‘sales pitch’. This value proposition should be aligned to your organisations key strategic themes, for example a FMCG client used their ESG target to drive supplier management performance. This meant a compelling story could be developed that galvanised both the business and the suppliers involved. Progress against this theme can and should be measured. For more specific measures, we believe the Head of Supplier Management and the supplier management measures should be aligned to progress against the six pillars. For example, taking the first pillar of value: Value: Determine what benefits will be tracked including monetary value so that the return from supplier management activity can be quantified. We know from the research that done well, supplier management should yield 3-6% over and above contracted value. When value is visibly delivered the case for continued investment writes itself. It is however a good idea to have a mix of quantifiable and non-quantifiable (customer of choice) measures as the relationship benefits are equally valuable. The research tells us that benefits are most available in the following areas:
• Access to scarce resource • Access to the supplier ‘A’ team • Preferential pricing
• Access to innovation first • Faster speed to market • Higher mitigation of supplier and supply chain risks
If you are serious about making supplier management successful in your organisation you need to get the right role definition, the right role focus and the right success criteria and metrics. Too often we see supplier management programmes fail because organisations have got this wrong. Talk to us if you would like to better understand the key steps you need to take to make your supplier management programme a great success.
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