2023 GLOBAL SRM RESEARCH REPORT
SIX PILLARS OF SRM
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Collaboration
Requiring a combination of process and behaviours, Collaboration is the basis on which supplier management will not only deliver contractual obligations and anticipated value, but will also unlock the potential to deliver value that goes beyond existing contracts. This pillar explores both value release initiatives and the development of open and transparent relationships. It links most closely to the Value pillar proving the value on which the collaboration should focus, and the People pillar to identify and develop the skills and behaviours necessary to make it successful.
Six Pillars of SRM
Engagement Obtaining strong and active support across three key groups of stakeholders is vital to ensuring supplier management programmes have the best chance of achieving success. The first group of stakeholders are executives and senior managers, who provide direction, role-model behaviours and access to resources and budgets. The second group are operational and wider business stakeholders who regularly interact with strategic suppliers. The final group are suppliers themselves. This pillar relies heavily on Value as the basis on which engagement and support can be established. Value Gaining a clear understanding of what value means for the business is crucial. Value articulated as part of a value proposition or business case must align to the organisation’s strategic objectives and to the challenges it faces. Value needs to be defined in the broadest possible sense and be extended beyond cost to encompass improved performance, reduced risk, supply chain resilience and innovation. This pillar links strongly to Engagement as it will help create buy in and support, and to Governance where tracking and reporting of value needs to be established.
‘The Six Pillars of SRM’ is a best practice model that defines the key elements for building a successful supplier management programme. These elements are: Value; Engagement; Governance; People; Technology and Collaboration.
These elements remain a constant, no matter what the aims and objectives are for your supplier management programme. From driving value, establishing good governance and oversight, improving performance or making supply chain more resilient. The Six Pillars of SRM remain relevant and a foundation ]for success.
Technology
Governance Activities defined under the Governance pillar are the foundation on which effective supplier management programmes are built. Within the scope of this pillar are the processes to undertake the segmentation of suppliers, alignment of appropriate treatment strategies, processes to manage contracts, performance, risk, relationship development and value tracking. In addition, this is where the meeting structures and roles and responsibilities for supplier management are established. This pillar links strongly to Value, as it enables value to be tracked and reported and also to People where it informs the development of role profiles. Harnessing the power of technology is vital to making supplier management a consistent and sustainable activity. Technology enables supplier management processes and practices to be optimised along with the ability to manage information and automate reporting. This allows practitioners to spend more time engaging suppliers and the business to drive value from relationships. The Technology pillar clearly links strongly to Governance as it is a key enabler for many of the processes defined. It also supports Collaboration in that it creates a shared workspace to collaborate with suppliers and internal stakeholders.
People It’s crucial to have the right skills and competencies within the team delivering supplier management. This pillar provides a framework for people development that encompasses the definition of roles, identification of requisite skills and competencies along with their assessment. In addition, it looks at the provision of training and positioning of supplier management goals and objectives in personal development plans. This pillar’s strongest link is to Governance, from where it draws the activities that need to be incorporated into role profiles. It also draws on Collaboration to reflect the behaviours necessary to collaborate with suppliers and internal stakeholders.
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