2024 Global SRM Research - Return on Relationships

2024 GLOBAL SRM RESEARCH REPORT

COLLABORATION SUMMARY OF INSIGHTS

Leaders also excel in risk management, with 61% observing notable improvements due to closer relationships, compared to 38% of Fast Followers and just 33% of Followers. Interestingly, it is the lower maturity groups that are reporting higher benefits in some areas compared to Leaders, such as financial gains and reduced disputes. This highlights a surprising dynamic: despite their less mature supplier management strategies, these groups are still realising significant advantages from their efforts to collaborate with suppliers. This shift suggests that even initial steps towards better supplier collaboration can yield substantial rewards, emphasising the value of developing and enhancing strategic partnerships within the supply chain. Supply chain mapping Supply chain mapping is a useful process to gain a comprehensive understanding of the entire supply chain, extending outside direct suppliers to include secondary suppliers and beyond. Through this exercise, organisations gain a deeper insight into the operations of their supply base and the complexities involved in meeting their business needs. A deeper knowledge of the supply chain strengthens organisations by providing perspective on the complexity of their supply chains and the potential risks inherent with them. Notably, 84% of Leaders and 70% of Fast Followers have either fully or partially mapped their supply chains, in stark contrast to only 34% of Followers. Alarmingly, 49% of Followers have not undertaken any supply chain mapping, resulting in reduced visibility and transparency across their supplier network. This lack of insight makes it challenging for these organisations to share information effectively, manage risks and respond to disruptions or unforeseen events. Mapping the supply chain can promote a collaborative ecosystem, facilitating the sharing of data, challenges, and processes – in turn supporting joint planning events.

a mere 10% of Followers have introduced joint account plans with over half of their key suppliers, mirroring last year’s findings. However in a promising shift, 41% of Fast Followers now have joint account plans, a substantial increase from 31% last year. Leaders continue to excel, with 66% effectively coordinating with the majority of their critical suppliers. Particularly noteworthy is the consumer goods sector, where intricate supply chains and the potential for demand volatility make collaboration not just beneficial, but essential. Here, 42% of firms have embraced joint account plans with their critical suppliers, showcasing a proactive approach to navigating complexity. In stark contrast, the capital-intensive industry remains cautious, with only 12% engaging in similar levels of planning. This landscape of collaboration illustrates a clear divide: those who embrace joint planning as a strategic advantage thrive, while others risk falling behind. The need for comprehensive, forward-thinking supplier management strategies has never been more critical. What proportion of your most critical/strategic suppliers have you created joint account plans? Leader Fast Follower Follower 75% to 100% 32% 15% 4% 50% to 75% 34% 26% 6% Less than 50% 34% 59% 90%

Examining the results in more detail, the financial services industry leads in supply chain mapping, with 23% having fully mapped their networks. This is likely influenced by the industry’s stringent regulatory requirements, the sensitivity of its data and its inherently risk-adverse nature. Have you mapped your supply chain through multiple tiers? Leader Fast Follower Follower Yes - mapped fully 32% 20% 5% Yes - partially mapped 53% 50% 30% No 8% 21% 49% Do not see the benefit 0% 1% 2% Don’t know 15% Joint account plans The creation and implementation of joint account plans with key and strategic suppliers can pay dividends; enhancing the opportunity for mutual benefits. These plans (pivotal activities for nurturing stronger, collaborative relationships) are a hallmark of a mature supplier management programme. Yet, despite their clear value, our research this year reveals a large gap: 77% of companies lack such strategic frameworks with their most critical suppliers. Delving deeper into the maturity spectrum, 8% 8%

of Leaders see improved innovation and continuous improvement as a significant benefit from collaboration with their critical suppliers. 76%

of Followers do not have joint account plans with the majority of their suppliers. 90%

of Leaders are receiving improved account management because of their customer of choice status with their critical suppliers. 76%

Collaboration is fundamental to the success of a supplier management programme, ensuring not only the fulfilment of contract obligations but also the realisation of anticipated value. It is the key to unlocking potential that goes beyond the scope of existing contracts, driving additional value through deeper and more strategic partnerships. Respondents highlighted that collaboration with critical suppliers is driving substantial benefits, particularly in areas of trust, innovation, and engagement. This heightened level of trust fosters an environment where ideas and data flow more freely, sparking innovation and enabling joint problem-solving. Enhanced engagement not only solidifies relationships but also equips organisations to tackle challenges head-on, ensuring they stay on course to meet long-term strategic objectives. A key outcome of this collaborative effort is that organisations are more likely to become a customer of choice. This status grants them preferential access to scarce resources, cutting-edge insights, and pioneering innovations from their critical suppliers.

Among Leaders, the belief in this advantage is almost universal, with 95% confident that their collaborative efforts have positioned them as a preferred customer for the majority of their suppliers. However, it’s important to consider that while these benefits are significant, they require consistent effort and alignment with broader strategic goals to fully realise the potential of these relationships. Organisations that actively nurture these partnerships are not only securing immediate gains, but also laying the groundwork for future success in an increasingly competitive marketplace. Collaboration with suppliers Respondents identified the most significant benefits from collaboration with their key and strategic suppliers, echoing trends observed in previous years. Leaders and Fast Followers, with their more mature supplier management strategies, continue to report the most substantial gains. Improved trust is highlighted as a primary benefit by 57% of companies, underscoring its importance in strengthening supplier relationships. Innovation and continuous improvement opportunities follow closely, with 53% of respondents marking it as crucial. Notably, 76% of Leaders attribute their collaborative efforts to enhanced innovation, contrasting with only 47% of Followers who report similar outcomes.

What have been the most significant benefits of collaboration with your critical and strategic suppliers? Leader Fast Follower Follower Improved trust 63% 60% 55% Improved innovation and continuous improvement capability 76% 61% 48% Enhanced engagement 61% 52% 47% More win-win outcomes 53% 50% 45% Financial benefit 37% 52% 43% Improved risk management 61% 38% 33% More joint planning and mutual goals 42% 39% 32% Improved governance 32% 39% 30% Fewer disputes 18% 32% 27% ESG improvements 32% 19% 15%

“57% of respondents highlighted improved trust with critical and strategic suppliers as a key benefit of collaboration – the highest scoring aspect of the survey for this question. This figure stood at just over 66% last year.”