2024 GLOBAL SRM RESEARCH REPORT
RETURN ON RELATIONSHIPS
30
31
We consistently see an understanding and appreciation of the value that can be obtained through undertaking supplier management, and stakeholders appear fully aware of the extent to which it can positively impact a business and its operations. However, the main barrier to gaining stakeholder buy-in appears to not be in value creation, but demonstrating the value captured from supplier mamagement activites. Not only is it challenging to attribute growth to traditional metrics (such as return on investment), organisations also lack the ability and means to capture additional forms of value that are increasingly important in today’s society, such as ESG/social value, innovation, and reputational metrics. The true value that supplier management can deliver must become more widely understood among stakeholder groups to elevate the importance of the practice and its fundamental elements (contract, risk, performance and relationship management). Enhancing the accessibility, measurement and interpretation of this data is essential not just for sustaining supplier management, but for transforming it into a powerful driver of change within organisations. As a concept, ‘Return on Relationships’ is designed to recognise, quantify and access the unique value that a relationship-centred approach can deliver. Many organisations are realising that their strategic goals and objectives can only be fully realised through close collaboration with key suppliers, where joint initiatives can unlock true potential of these partnerships. The goal for supplier management practitioners is to be able to capture and measure the benefits that arise from a given activity or initiative discussed in collaboration with suppliers in a structured, repeatable and recognised way. Not only does supplier management require robust governance procedures and a broader set of metrics (that help define and track ‘soft’ benefits), it also demands a shift in how we approach collaboration with suppliers. Actively encouraging joint discussions and initiatives with suppliers will create a symbiotic relationship that is better placed to yield results. In an age where ‘reputation’ and the ‘relationship’ take precedence over ‘information’, steps taken to demonstrate a more conscious way of undertaking business operations is key for longevity. The key activities to improve the return on relationships: • Invest time and effort into developing new metrics to capture, measure and track value. Utilise data and digital tools to help inform this. • Implement joint innovation and process improvement initiatives with key suppliers. • Increasingly look at ways to attribute benefits directly to initiaitves that involve close collaboration with key suppliers. • Expand your business case to illustrate, communicate and articulate a more all-encompassing definition of value, tailored to your organisation. “Focusing on how to capture value in its various forms, alongside defining what value is to your organisation, is key to gaining increased buy-in for supplier management.”
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