2023 GLOBAL SRM RESEARCH REPORT
72
Let’s consider each in turn. • Alignment : By aligning on a standard set of objectives with their strategic suppliers, organisations can increase trust, partnership, and focus toward common goals • Accountability : With a greater understanding of strategic goals, organisations can improve the level of accountability, especially when multiple suppliers are operating within the same ecosystem • Collaboration : With the underlying theme of ‘competitors outside and collaborators inside’, suppliers selling the same products or services can find common ground to achieve organisational outcomes Let’s take an example. Say, for instance, that I am aiming to deploy a data centre at a particular location next year. Achieving that objective will require multiple parts of the business to work together - finance, supply chain, procurement, operations, networking, services and so on. I’ve remembered to involve each of them in the process, yet forgotten to incorporate suppliers. I’ve kept them at arms-length, yet, it is they who will play an important role in delivering them During a complex engagement you need to demonstrate an increasing level of trust between different stakeholders, including your strategic suppliers. You can achieve that by involving your strategic suppliers upfront in your planning cycle and providing them visibility of areas where they are likely to be involved. Which approach do you think will be more impactful? Scenario one, where your strategic suppliers are kept in the dark, or scenario two, where they are brought in early on, have had serious conversations with your company and are marching in the same direction as you?
Through the use of Vendor Objectives and Key Results (‘VOKRs’), you can bring in your strategic suppliers and manage them as part of your ecosystem. Treat them as an extension of your organisation, by inviting them to join the planning process upfront. Companies with advanced supplier- collaboration capabilities tend to outperform their peers by two times in terms of growth and other metrics 2 . The business case is right there - not to focus on internal maturity but to concentrate on the supply side to beat your peers. Using a structured framework like OKRs can further improve these outcomes and drive mutual success. What needs to change? Companies have become very used to keeping their suppliers at a distance, communicating through contracts and KPIs. Leveraging suppliers as an extension of your company, is therefore a hard thing to do. It requires a mindset change to allow them into your upstream planning process.
You need to tread the line between retaining confidentiality and agility, while sharing and collaborating, because collaboration has been demonstrated to reap rewards. Bringing in suppliers early on engenders trust, and focuses their effort on helping you to achieve your goals, instead of what’s simply contained in their contract. In a recently concluded survey, more than 69% of supply chain leaders shared that diversified suppliers will continue to be relevant in the future 3 . OKRs can drive improved collaboration between diversified suppliers on your behalf as they work together towards achieving your desired outcomes. Adoption and use of OKRs is on the rise around the world. The next stage for organisations most experienced at using this technique has got to be incorporating suppliers into the process. Much is set to change over the next few years and I’m excited to see what it brings.
Revamp your segmentation criteria Years of disruption require action. Build robust governance models covering contracts, performance, risk, and relationships.
Need help? Let’s talk https://www.stateofflux.co.uk/2023srmreport/ segment-your-suppliers
2 McKinsey: Taking Supplier Collaboration to the Next Level: https://www.mckinsey.com/capabilities/operations/our-insights/taking-supplier-collaboration-to-the-next- level#/ 3 McKinsey: Taking the pulse of shifting supply chains: https://www.mckinsey.com/capabilities/operations/our-insights/taking-the-pulse-of-shifting-supply-chains
Powered by FlippingBook