2024 GLOBAL SRM RESEARCH REPORT
MAXIMISE THE RETURN ON YOUR RELATIONSHIPS
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Maximise the return on your relationships
Strategic supplier management generates more value, reduced risk and improved innovation
Done well, effective supplier management generates a huge array of benefits for organisations, and leaders in the field are reaping these rewards. But even for them there is so much more to do, and for followers - and those that have barely begun - there are multiple further gains to be won. The challenge for many procurement and supply teams is that some of these advantages are easier to spot and quantify than others. The business case that many supplier management programmes are built on typically covers three things: value, risk and innovation. Some elements of this can be quite straightforward to measure, while the softer, more nebulous advantages can be just as crucial but harder to capture and evidence. For instance, if your organisation is seen as a ‘customer of choice’ by a key supplier, it can mean the difference between getting - or missing out - on a vital product that is in scarce supply. Customers of choice might hope to get first refusal on innovations; greater investment in the relationship; access to and retention of the best people; superior account management; priority supply during periods of shortage; and a level of commitment that is a cut above and sees suppliers going the extra mile.
Robust supplier management practices have emerged as a linchpin for organisations aiming not only for operational excellence and to maximise their return on investment (ROI), but even simply to be able to keep going. The pandemic stretched and severely tested buyer-supplier relationships and those found wanting were among the first to fail and fall. It is vital that procurement and supply teams are able to make the business case for supplier management by directly linking it to how it can help address key challenges. Aligning supplier management outcomes to business drivers at a strategic level and engaging both suppliers and the business to deliver is essential. It may require more creativity to find ways to capture and report value by using technology to track both direct and indirect financial benefits, but without that businesses may be missing out on the full return on relationships. Evidence and research State of Flux, which is globally recognised for specialising in procurement and supplier management, has been at the forefront of research which explains the tangible benefits to be gained from strategic supplier management.
Its studies have shown time and again that the full value proposition of supplier management includes multiple gains. These include improved supply chain resilience; better continuity; increased likelihood of success through shared goals and objectives; more risk/reward sharing; joint product, process and service development; improved communication; and optimisation of resources and skills. Its annual research, now in its 16th year, emphasises the transformative impact of strategic supplier management on an organisation’s bottom line. This includes: » Improved risk mitigation and resilience: Effective supplier management significantly contributes to risk mitigation and organisational resilience. Proactive identification and mitigation of supplier risks translate into reduced disruptions, safeguarding operations and preserving revenue streams. » Greater innovation and competitive advantage: Organisations that strategically manage their supplier relationships foster innovation and gain a competitive edge.
“If your organisation is seen as a ‘customer of choice’ by a key supplier, it can mean the difference between getting - or missing out - on a vital product that is in scarce supply.”
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