2023 GLOBAL SRM RESEARCH REPORT
CASE STUDY: AIRSERVICES AUSTRALIA
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are. Spend a lot of time with off-shore suppliers and build relationships with them. Ensuring you have trust and two-way communications is critical in every engagement, it helps you to have access and quickly unstick any issues.” Airservices maps out who the key individuals are and creates inverted account plans to understand who and where the P&L is held. “Get to know your supplier as they get to know you,” she advises. Change underway Edgerton joined Airservices from MLC Life Insurance, having previously held senior positions at Westpac, Ausgrid and NSW Roads and Maritime Services in Sydney. She recognised it would benefit from embedding structured SRM, backed by appropriate executive support, Fleur Edgerton on the effective roll-out of a supplier relationship management (SRM) programme Clear Objectives: Clearly define the goals and objectives of the SRM programme. This includes determining the desired outcomes, such as reduction in cost to service, improved quality of performance and minimisation of delivery and operational risk, ensuring VFM is maintained and optimised throughout the engagement of the relationships and extracting value over and above the contract via innovation. Clear objectives help to guide the implementation and provide a focus for all stakeholders involved. Executive Support: Secure executive sponsorship and support for the SRM programme. Executives play a key role in driving the programme’s success, providing necessary resources, and promoting the importance of SRM within the organisation. Internal Capability Building: Invest in training and building internal capabilities related to SRM. Develop the necessary skills, knowledge, and tools for effective SRM within the organisation. This empowers employees involved in managing Critical success factors
investment, and clarity about why it was putting the changes in place. “We want to extract mutually beneficial value over the course of our contracts, enhance outcomes and deliver value to our customers and shareholder,” she says. The commercial team engaged with State of Flux to carry out a segmentation exercise of its supply base, and is establishing supplier performance metrics covering cost, performance, ease of doing business, delivery, innovation, risk and compliance. “We are still rolling out these activities to ensure Airservices speaks with one voice with our suppliers and helps to embed them into our culture.” It also carried out a Voice of the Supplier survey to understand how supplier relationships and helps to ensure the long-term success of the SRM programme. Supplier Segmentation: Segment suppliers based on their strategic importance to the organisation. Categorise suppliers based on criteria such as spend, criticality, or potential value they bring. This segmentation helps to prioritise efforts and resources towards the most critical suppliers and tailor relationship management strategies accordingly. Stakeholder Engagement: Communicate the importance and benefits of the SRM programme to internal stakeholders. Engage key stakeholders from different departments or functions who interact with suppliers, such as procurement, operations, logistics, and finance. Collaborative involvement ensures alignment, cooperation, and buy-in throughout the SRM journey. Governance Structure: Establish a clear governance structure for managing supplier relationships. Define roles, responsibilities, and decision-making processes for both internal and external stakeholders. This structure ensures accountability
it was viewed by its key suppliers. That process included some deep- dive interviews with several strategic suppliers, the results from which it is building into the next stage of its change programme. “We are looking forward to further enhancing relationships with our suppliers as we extract those insights. It’s already been invaluable,” Edgerton says. Airservices now has structured governance in place, with monthly performance and commercial meetings with some strategic suppliers and clarity over roles and responsibilities on both the buyer and supplier side. It is having more collaborative conversations and is now more consistent as a business in its approach to suppliers.
8 steps to embedding suppliers as an integral part of your extended enterprise
4. Relationship Management: Designate relationship managers or teams responsible for managing and nurturing relationships with key suppliers. These individuals can serve as points of contact, foster trust, and address any issues promptly. Regularly engage with suppliers through meetings, performance reviews, or joint initiatives. 5. Collaboration and Innovation: Foster a culture of collaboration and innovation with your suppliers. Encourage open communication, knowledge sharing, and joint problem-solving. By involving suppliers in your innovation processes, you can tap into their expertise and drive continuous improvement in your products or services. 6. Performance Metrics and Measurement: Establish performance metrics and measurement systems to track supplier performance. Regularly assess their adherence to quality standards, delivery schedules, and cost targets. Provide feedback, celebrate successes and recognise exceptional performance to promote continuous improvement. Strategic engagement While aligning with public procurement rules means it has to be careful about its engagements with suppliers, Airservices ensures suppliers are kept informed about its values and overall strategic objectives. “We’re on a maturity journey and evolving in that space,” says Edgerton. “Suppliers are aware of our core values, which resonate easily across our supply base. These are ‘Safe always, Service first, Love what we do, Work as one and Own it’. We like to share our strategic goals with suppliers so that they can understand and find ways to engage with us. We just have to be prudent because we’re a Commonwealth-owned operation, so competition and transparency are key requirements.”
7. ESG and Modern Slavery/ Sustainability: Ensure suppliers meet regulatory requirements and ethical standards. Collaborate on environmental, social, and governance aspects. Engage suppliers in sustainable practices, responsible sourcing, and social responsibility initiatives to align with your organisation’s values. 8. Long-term Contracts and Incentives: Consider long-term contracts with key suppliers to strengthen relationships and provide stability. Offer incentives for exceeding performance targets or achieving shared goals. Contracts and incentives can encourage suppliers to invest in your success and foster a long-term partnership.
Follow these steps to create a collaborative environment that drives mutual success, innovation, and value creation: 1. Embedding suppliers as part of an enterprise ecosystem involves building strong and collaborative mutually beneficial environment, and importantly ensuring that they are aware and aligned to your culture and values. 2. Identify Strategic Suppliers: Identify suppliers who are essential to your organisation’s success and have a significant impact on your products or services. These could be suppliers of critical components, strategic partners, or those who contribute to your competitive advantage. 3. Share Strategic Goals: Clearly communicate your organisation’s strategic goals and objectives to your suppliers. Help them understand how their products, services, and relationships with them, and fostering a collaborative and collaboration contribute to achieving those goals. Engage in dialogue to align their objectives with yours and find ways to mutually benefit each other. “Suppliers told us there was now greater alignment towards common goals; more streamlined internal processes; and that we were adapting to requests. The results also gave us some insight into areas where we can focus our attention for the next stage of the programme.” Some of this will include leveraging technology and digital industry experience, and prioritising sustainability activities. “We were already highly engaged with suppliers, but the survey results have given us an alternative feedback loop. Getting these insights is critical to our development. It helps to make us a better customer because we want to be a customer of choice and get access to the best and brightest.”
and effective communication channels for managing and nurturing supplier relationships.
Performance Monitoring: Implement performance metrics and monitoring mechanisms to assess supplier performance against pre-established key performance indicators (KPIs). Regularly review the results and provide feedback to suppliers. This ongoing measurement helps to track progress and identifies areas for improvement. Continuous Improvement: Nurture a culture of continuous improvement. Encourage open communication, feedback, and collaboration with suppliers to drive innovation, quality enhancements, and process optimisation. Regularly review and update the SRM programme to adapt to changing organisational needs and evolving supplier relationships. By considering these critical factors, organisations can enhance their supplier relationships, drive value, and achieve their SRM programme’s desired outcomes.
Relationship and trust are critical, says Edgerton. Respect and understanding each other’s priorities are also paramount; as is cultivating open communication, so any concerns can be shared, and collaboration can occur where it is permitted. “I am relationship-driven in business and always have been. That’s what I’m passionate about doing. I’m leveraging market expertise to maintain our core business and remain current and on top of trends, including digitalisation and automation. “We orchestrate the business, we don’t own the executive engagements - they do. The business knows their business more than we do - we support them. We have a role to play as facilitators and orchestrators, resolving issues and helping with relationships.”
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