2024 GLOBAL SRM RESEARCH REPORT
RELATIONSHIPS MATTER
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Relationships matter “No man is an island, entire of itself, every man is a piece…a part of the main.” So said the poet John Donne, and the same sentiment can be applied to business. No organisation is completely independent or self-sustaining; each forms part of an interconnected web that relies on others – be they suppliers, partners, customers, or all three.
Welcome to the 16th Global SRM Research Report , a study that explores the ever-evolving landscape, role and value of supplier relationships. My thanks to the 496 individuals from 334 organisations across the globe who took part in this year’s survey. As well as summarising the findings of this research, throughout this report are interviews and case studies with leaders from organisations ranging from tech multinational Microsoft to charity Cancer Research UK; Starbucks coffee company to Westpac bank and INEOS Automotive. These are designed to inform and inspire and we’re grateful to them for sharing with us all where they are on their supplier management journey. We also announce a training partnership between ourselves and The Chartered Institute of Procurement & Supply (page 18). As well as offering insight into the six pillars of supplier management (value, engagement, governance, people, technology and collaboration), this year’s book has a particular focus on the returns to be derived from supplier relationships. ‘Return on relationships’, or ROR, is a multifaceted metric that goes beyond the traditional financial lens of return on investment (ROI). It seeks to measure the holistic impact of supplier relationships on an organisation’s bottom line. It encompasses factors such as risk mitigation, innovation, operational
efficiency, and strategic alignment (page 4). To calculate an ROR effectively,
This, respondents said, is the most significant factor that prevents organisations from quantifying the returns on their supplier relationships. Technology remains a barrier for many (page 72). Almost a fifth (19%) reported that their company had no system in place to support contract lifecycle management, and 21% said the systems they had to support performance management were ‘poor’. However most Leaders in the field of SRM (82%) do have a dedicated system to support contract lifecycle management. Worryingly, close to a quarter (23%) of all respondents said they had not yet developed a business case at all for supplier management (page 43). Also of concern is the drop we’ve seen in the number of SRM leaders. Our research shows year after year that the benefits of SRM are proven and compelling. Yet both of these findings demonstrate a lack of investment in this crucial field. Not having a well-structured programme in place leaves value, in all its forms, on the table; an oversight organisations can ill afford.
organisations need to consider both quantitative and qualitative aspects of their interactions with suppliers, something we assist with on page 11. Close to half (46%) of participants in our survey revealed their company’s supplier management programme is delivering financial benefits of above 4% per annum (page 42). And just over 9 in 10 Leaders indicated that they capture or monitor the financial benefits that are delivered above and beyond contracted spend for their critical and strategic suppliers. Beyond financial transactions, respondents said they consider ‘enhancing collaboration and innovation’ the most important return on relationships metric (page 32). They agree that ensuring regular supplier meetings and performance reviews are in operation is the key action they can take to ensure they achieve a successful return with suppliers. Benefits awarded to ‘customers of choice’ (page 4) can be the difference between having access to a scarce resource, improved speed- to-market, reduced risk, increased resilience, better communication, and so much more. However, for many it is the capturing and reporting of returns that remains a challenge. They are particularly hampered by a lack of access to accurate or meaningful data.
Contents 03 Introduction: Relationships Matter 04 Maximise the return on your relationsips 08 Welcome to the reputation and relationship age
36 Case Study: Microsoft
- Harnessing size and scale
40 Value 46 Case Study: Cancer Research UK - Gearing up to benefit 50 Engagement 56 Case Study: INEOS - You have to be comfortable with uncertainty 60 Governance 66 People 72 Technology 78 Interview: Starbucks - Measuring out value 82 Collaboration 88 Case Study: Westpac - Raising performance together 93 About State of Flux
11 Decoding success 14 Making connections, not a quick buck
18 Partnership provides skills boost 20 About Supplier Management, State of Flux and our research 22 Six Pillars of SRM 24 Summary of Key Findings 26 Research Round-Up 28 Call to Action 30 Return on Relationships
“No organisation is completely independent, each forms part of an interconnected web.”
Alan Day Chairman & Founder State of Flux
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