PEOPLE SUMMARY OF INSIGHTS
2023 GLOBAL SRM RESEARCH REPORT
76
77
How is supplier management resourced? Leader Fast Follower Follower Full time dedicated supplier managers responsible for more than one relationship 54% 50% 25% Full time dedicated supplier managers responsible for one relationship 15% 4% 3% Part time and combined with broader category management and/or sourcing responsibilities 23% 32% 39% Part time and combined with broader operations and / or service management responsibilities 8% 14% 23% Skills and competency development The development of skills and competencies should not be a series of ad-hoc activities, but instead should be a structured process that follows a clear path. We can see from our survey results that companies are frequently jumping steps in this process or addressing them in the wrong order. To begin with, less than 50% of companies overall have defined the main supplier management role and also that of others involved in supplier management. Leaders are the exception here; over 80% have completed this step. A similar picture emerges when we look at creating job descriptions where Leaders are again demonstrating best practice. At the heart of the process is creating a skills and competency framework and assessment that establishes the baseline for supplier management in the organisation. Here, less than 35% of companies have developed a skills and competency framework, and even fewer, 21% have carried out an assessment. Leaders are far more likely to have completed these steps, with 83% and 67%, respectively. Finally, while almost nine out of ten Leaders have implemented supplier management training, this compares with 43% overall.
“The training’ supply vs. demand’ challenge still exists with a significant deficit between the needs organisations identify and their ability to deliver.”
of Leaders favour a dedicated supplier manager role. 69%
of companies believe good communication is a top supplier management skill. 81%
of Leaders have developed supplier management skills and competency framework. 83%
see the greatest need for improvement and where training is being delivered.
We observe a ‘hockey stick’ shape to the development of skills and competencies, with progressively fewer of the process steps being completed until a sudden increase in personal development objectives and training. This pattern suggests that companies jump to the training stage without completing the groundwork. What supplier management skills and competency development activities are being undertaken? Leader Fast Follower Follower Implemented Supplier Management training 89% 55% 32%
Organisations rank communication as the most important skill required for supplier management. The data shows 81% have it in their top three. Communication should go well beyond speaking and writing clearly; it should include behaviours such as empathy and the ability to listen and comprehend. This is where the Six Pillars of SRM link with each other, as a communication plan based on comprehensive RACSI should form part of the governance model. For supplier management, an ability to communicate effectively with a wide range of stakeholders, from senior stakeholders to operational teams, is crucial – we would agree that it is the most important skill. The second- ranked supplier management ‘skill trust building’ featuring in the top three skills and competencies of 76% of respondents. This skill is difficult to teach as while there are techniques, for the most part, it is a personal behavioural attribute. If individuals can demonstrate openness and honesty and be trustworthy, they will build trust in others. This can be a challenge in some organisational cultures and require individuals to push the boundaries of historical behaviours. Next comes ‘strategic thinking’. Effective supplier management, particularly as it relates to critical and strategic suppliers, requires a strategic thinker who can grasp the big picture and set direction. They must link the past (experience, lessons learned etc.) with the future to identify and grasp new opportunities. In our survey, 74% of companies put strategic thinking in the top three supplier management skills. We have previously described the situation illustrated by the chart bars as the ‘skill supply vs. demand’ challenge. This chart illustrates that for some of the most important skills required for supplier
Developing skills and competencies remains one of the weakest features of supplier management practice. Over 20% of companies currently provide no specific supplier management training. For the most part, supplier management practitioners are part of either a centralised or business-based procurement function. Roles are now more often being created that are dedicated to supplier management but are also combined with other procurement responsibilities. However, the supplier management roles being established by Leaders and Fast Followers are increasingly dedicated and free of other procurement responsibilities, albeit covering a number of relationships. Followers still favour a part-time role combining other procurement responsibilities.
The development of skills and competencies is still being approached in a somewhat ad- hoc fashion, instead of a structured process. Companies are frequently jumping steps in this process or addressing them in the wrong order. Organisations rank communication as the most important skill required for supplier management, followed by ‘trust building’ and ‘strategic thinking’. The ‘supply vs. demand’ challenge still exists with a significant deficit between the training needs organisations identify and their ability to deliver. Who does supplier management? Where supplier management practitioners sit within organisations has not changed significantly since this question was last analysed in 2021. Just over half of practitioners (52%) are based in a central/group procurement function, with a further 15% still in the procurement function but based in the business. Financial Services and IT/Telecoms are the only industry sectors where a significant amount of supplier
management is conducted outside the procurement function. Both industries have a history of embedding ‘vendor management’ in the business. How is supplier management resourced? There is an increasing preference for supplier management roles to be dedicated and free of other procurement responsibilities. Leaders and Fast Followers favour using full-time dedicated supplier managers responsible for multiple supplier relationships (54% of Leaders; 50% of Fast Followers). Followers have not yet replicated this approach, where 38% prefer a part-time role combining other procurement responsibilities. Just a few leaders have taken the step to appoint supplier managers dedicated to the management of just one relationship, even in the case of critical and strategic suppliers. This is in contrast to suppliers, where their critical and strategic customers typically have a dedicated account manager.
Included Supplier Management in personal performance measures
83%
53%
21% Developed a Supplier Management skills and competency framework 83% 50% 21% Defined the main Supplier Management role 81% 73% 36% Defined the Supplier Management roles of operational personnel 81% 53% 31% Created or updated job descriptions 74% 57% 27% Completed a Supplier Management skills and competency assessment 67% 33% 10% Skills and competencies The chart opposite reflects the importance of various skills and competencies related to the delivery of effective supplier management. The ranking (top to bottom) is the importance assigned by companies participating in this year’s research. The chart bars indicate where organisations
Where does responsibility for supplier management typically reside in organisations? (All respondents)
4% In another function (central / group)
9% Stand-alone centralised Supplier Management function 7% No clear ownership 13% In another function (decentralised / business unit)
52% In the procurement function (central / group) 15% In the procurement function (decentralised / business unit)
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