GOVERNANCE SUMMARY OF INSIGHTS
2023 GLOBAL SRM RESEARCH REPORT
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When we look at best practice risk management examples, it’s clear that Leaders and Fast Followers are adopting these more.
What elements of performance management are in place for critical and strategic suppliers?
How are companies improving their capabilities to carry out supplier due diligence? Follower Increasing third party data sources (ie. financial risk ratings, cyber risk ratings) 81% 81% 65% Increasing internal capabilities 81% 57% 46% Leveraging standardised questionnaires 59% 57% 40% Accessing shared assessments or pooled audits 50% 35% 23% Leader Fast Follower Outsourcing due diligence responsibility and ongoing supplier risk management 46% 28% 17% None 0% 5% 15%
“Alongside contract and performance management, risk management represents fundamental good practices that supplier management must build on.”
While this figure increases to more than 90% for Leaders, it still shows considerable room for improvement. An important part of the governance model is the mapping of relationships. The feedback we’ve received shows that the relatively simple but very effective RASCI (Responsible, Accountable, Supporting, Consulted, Informed) tool is often overlooked. Where it is deployed, it often omits to include supplier stakeholders, making it much harder for a supplier to be positioned as part of an extended enterprise. How are relationships mapped with critical & strategic suppliers? Leader Fast Follower Follower Fully documented RASCI in place - internal & supplier 57% 53% 20% Fully documented RASCI in place - internal 24% 18% 16% Internal & supplier roles & responsibilities known but not documented 13% 25% 32% Internal roles & responsibilities known but not documented 6% 2% 14% Roles & responsibilities not defined 0% 2% 19% Contract and performance management As highlighted in previous reports, the failure to put in place effective contract and performance management continues to be a concern. These building blocks provide evidence of supplier performance that gives stakeholders the confidence to progress beyond the operational and have discussions about collaboration and mutual value. This year we examine the various methods used to manage contracts and performance for critical and strategic suppliers through the lens of Leaders, Fast Followers and Followers.
Leader
Fast Follower
Follower
Clearly defined KPIs/SLAs
93%
83%
57% Dedicated review meetings
89%
80%
47%
Joint business plans
67%
51%
19% KPI offline tool
Risk management Alongside contract and performance management, risk management represents fundamental good practices that supplier management must build on. Before the pandemic, the picture of risk management had revealed a worrying lack of progress in properly establishing it as a core part of good supplier management. In 2020, the number of companies reporting that effective risk management was in place for more than half of their critical and strategic suppliers was fewer than 25%. It’s encouraging that in 2023 this figure now exceeds 75%. Again, we examine the methods being adopted to manage risk from the perspective of Leaders, Fast Followers and Followers. When we look at best practice risk management examples, it’s clear that Leaders and Fast Followers are adopting these more. There is a large gap between these groups and Followers regarding dedicated risk review meetings, contingency and business continuity plans, and regular risk assessments. Despite the increased focus on risk, it’s worrying that ad hoc meetings are still used by around 50% of companies (including Leaders) to review risk. However, we have seen a marked increase in risk management technology platforms, currently used by 63% and 49% of Leaders and Fast followers, respectively.
What elements of contract management are in place for critical and strategic supplies? Leader Fast Follower Follower A contracts management technology platform 83% 65% 40% Ad hoc meetings 56% 47% 46% Dedicated meetings 29% Periodic contract document reviews 56% 45% 30% Key contractual information captured offline 37% 41% 31% No monitored activities 0% 1% 12% 56% 55% For Leaders, it’s evident that they are far more likely to use a contracts management database, and just over 50% will review contracts at regular dedicated meetings. When it comes to performance management, the Leaders are consistently tracking clearly defined KPIs and have dedicated performance review meetings. While the majority still rely on offline tools to capture KPI data (e.g. MS Excel), there are signs of increasing investment in online technology platforms.
63%
59%
39%
Ad hoc meetings
54%
36%
45% Performance management technology platform 50% 26% 13% No monitored activities
2% 2%
9%
What elements of risk management are in place for critical and strategic suppliers? Leader Fast Follower Follower
Carrying out supplier due diligence checks is an important aspect of risk management. With these questions, we have tried to understand how organisations are improving their capabilities in this area. Companies are clearly taking advantage of the increasing number of third-party data sources that provide specialist services in the various areas of due diligence. Overall, 71% of companies are making use of these services. It’s also worth noting that almost half of Leaders are interested in outsourcing due diligence entirely.
Risks log in an offline platform 50% 48% 33% Ad hoc meetings where risk is discussed 50% 43% 45% Ad hoc risk assessments 44% 30% 27% Ad hoc reviews of supplier accreditations 37% 13% 15% No structured activities 4% 3% 13%
Dedicated risk review meetings 72% 64% 29% Contingency/Business continuity plans 72% 60% 29% Regular risk assessments 65% 59% 26% Risk management technology platforms 63% 49% 19% Regular reviews of supplier accreditations 56% 46% 15%
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