THE BUSINESS OF SUPPLIER RELATIONSHIPS Speaker... · Supplier Relationship Management Contract...
Transcript of THE BUSINESS OF SUPPLIER RELATIONSHIPS Speaker... · Supplier Relationship Management Contract...
Summary prepared for 29th September 2015
THE BUSINESS OF SUPPLIER
RELATIONSHIPS
Supplier Relationship Management
Contract Lifecycle Management
Strategic Sourcing and Category Management Co
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State of Flux was founded in 2004. We have grown into a leading procurement and supply chain consultancy providing contract lifecycle management, category management and strategic sourcing, and supplier relationship management services. We work with clients globally, and have our headquarters in London with offices in Switzerland, Greece and Australia. State of Flux has an extensive list of multinational clients to whom we offer significant and sustainable results quickly through our innovative consulting , training and technology solutions. State of Flux prides itself on its action centred approach, and tailors best practice procurement and supply chain solutions to our client needs.
About State of Flux
Contact: Mel Shutes [email protected] +44 (0) 2078 420 600 © 2015 State of Flux Ltd
About the research
2009
2010
2011
2013
2014
2015
7 years
Over 1200 different companies
Over 1800 respondents ?
2012
367 company responses
752 respondents
more than 25 industry sectors
© 2015 State of Flux Ltd
The six pillars of SRM
Business drivers &
value
Stakeholder engagement & support
Governance & process
People & skills
Information & technology
Relationship development
& culture
VALUE
Value linked to business objectives
Value beyond lower prices
Value delivered
Business drivers & value
Strong and active engagement and support from : • Executives • Business & operations • Suppliers
Stakeholder engagement & support
Supplier segmentation
Governance & process
Differentiated treatment strategies
Roles and responsibilities
Meeting structures
Role definition
People & skills
Skills and competencies
Capability assessment
Investment in training
Use of systems and technology
Information & technology
Systems functionality
Management of information
Collaboration
Relationship development & culture
Innovation
Customer of choice
ADVANCED
ESTABLISHED
DEVELOPING
UNDEVELOPED
© 2015 State of Flux Ltd
Leaders (average of 22 responses)
Fast followers (average of 25 responses)
Followers (average of 71 responses)
Others (average of 250 responses)
Business drivers &
value
Stakeholder engagement & support
Governance & process
People & skills
Information & technology
Relationship development
& culture
ADVANCED
ESTABLISHED
DEVELOPING
UNDEVELOPED
Current state 2015
2015 SRM maturity SRM index
6.0
4.5
3.0
1.5
4.0
3.5
2.9
© 2015 State of Flux Ltd
Top 5 Swiss Average Swiss (18 responses) Others Swiss
Business drivers &
value
Stakeholder engagement & support
Governance & process
People & skills
Information & technology
Relationship development
& culture
ADVANCED
ESTABLISHED
DEVELOPING
UNDEVELOPED
Current state 2015 – Switzerland ‘snap shot’
2015 SRM maturity - CH
ADVANCED
ESTABLISHED
DEVELOPING
UNDEVELOPED
6.0
4.5
3.0
1.5
© 2015 State of Flux Ltd
Current state 2015
Which industry is the most mature?
FMCG / CPG appear to be the most mature* industry sector
Followed by IT / HI TECH and FOOD & BEVERAGES
What is the primary focus of SRM?
Managing key supplier relationships to deliver value is
the focus for 78% of leaders, fast followers and followers
Which region is the most mature?
EUROPE and N.AMERICA rank equal for SRM maturity*
*Derived from the proportion of industry sector and regional company representation in the three benchmark groups
© 2015 State of Flux Ltd
Current state 2015
82% of companies report SRM making progress but still significant
barriers to overcome
Progress?
The number 1 barrier – lack of budget and resources
number 2 – lack of people and skills
number 3 – organisational change
number 4 – measuring benefits
number 5 – lack of supplier support
29% compared to 8% in 2014 and 13% in 2013
© 2015 State of Flux Ltd
BUSINESS DRIVERS & VALUE
BUSINESS DRIVERS & VALUE
The SRM value proposition / business case
Around 90% of leaders, fast followers and followers have either
documented the SRM value proposition or are working on it. For others the figure is closer to 70%
The leaders benefits
87% cost reduction 93% risk reduction 73% innovation
All others - 55% 57% 37%
Financial benefits
22% of companies report post contract financial benefits of 4%+ For leaders the proportion is 43% making them almost twice as likely to
be achieving the 4%+
© 2015 State of Flux Ltd
BUSINESS DRIVERS & VALUE
Customer of choice benefits – most often non contractual and at a suppliers discretion
Non-financial benefits
More than half of respondents report increased commitment and
improved account management. Amongst leaders its 9 in 10
46% - improved service levels
39% - improved quality
28% - improved end customer experience
25% - improved supply continuity
21% - improved access to the best resource
19% - improved speed to market
© 2015 State of Flux Ltd
STAKEHOLDER ENGAGEMENT
& SUPPORT
STAKEHOLDER ENGAGEMENT & SUPPORT
Only 4 in10 leaders have strong and active support from
senior stakeholders
For fast followers and followers this drops to 3 in 10 and for others 2 in 10
Senior stakeholder support
Senior stakeholder support barriers
VALUE PROPOSITION - 42% of companies believe senior executives are
insufficiently aware of the SRM value proposition.
OTHER PRIORITIES - 42% believe they have other priorities
PROCUREMENT PROFILE - 28% believe it relates to procurements
profile at the executive level.
© 2015 State of Flux Ltd
STAKEHOLDER ENGAGEMENT & SUPPORT
Supplier engagement
90% of leaders have gathered structured supplier feedback in the last 12 months
Fast followers and followers are <50% and others it is <30%
Progress barrier number 5 – lack of supplier support
29% compared to 8% in 2014 and 13% in 2013
© 2015 State of Flux Ltd
GOVERNANCE & PROCESS
Segmentation criteria
GOVERNANCE & PROCESS
Over 80% of companies have segmented their suppliers
Segmentation
How many strategic suppliers?
10 or less 36%
11 to 25 31%
25 + 28%
Don’t know 5%
Segmentation criteria
Spend 100% Business criticality 79% Potential for growth 44% Supplier footprint 41% Supplier innovation 37%
© 2015 State of Flux Ltd
Segmentation criteria
GOVERNANCE & PROCESS
SRM foundations
Only 20% of respondents have robust performance
management in place for >75% of their key suppliers
Only 22% of respondents have robust risk management
in place for > 75% of their key suppliers
Only 29% of respondents have robust contract management
in place for > 75% of their key suppliers
© 2015 State of Flux Ltd
PEOPLE & SKILLS
PEOPLE & SKILLS
Segmentation criteria
There is a direct correlation between training and being an SRM leader. A
ll re
spo
nd
ents
100%
57%
33%
22%
36%
Define the SRM role
Create an SRM competency framework
Implement SRM training
Complete an SRM skills and competency assessment
But there is clear under investment in the people development process.
?
© 2015 State of Flux Ltd
PEOPLE & SKILLS
Segmentation criteria
How important are these skills for SRM?
Which need most improvement?
Supply and Demand
DEMAND
How much training is provided?
SUPPLY
© 2015 State of Flux Ltd
INFORMATION &
TECHNOLOGY
Segmentation criteria
INFORMATION & TECHNOLOGY
Less than 1 in 10 companies are making significant use of
IT systems to support SRM. Amongst leaders its 1 in 3
Of those using IT around half describe its support for SRM as poor
Using IT systems
IT problems
59% feel current systems functionality is lacking
important components
58% are having to gather data from disparate
systems and rework manually
38% complain that systems cant be accessed by
stakeholders or suppliers
FUNCTIONALITY
INTEGRATION
ACCESS
© 2015 State of Flux Ltd
Segmentation criteria
INFORMATION & TECHNOLOGY
Current ‘efficiency’
79% of companies are creating scorecards and reports etc in Excel
Documents stored on a shared drive by 64% of companies
While 64% of companies have a contract management system only
42% have IT enabled performance management and 31% risk
management
© 2015 State of Flux Ltd
RELATIONSHP DEVELOPMENT
& CULTURE
Segmentation criteria
RELATIONSHIP DEVELOPMENT & CULTURE
9 in 10 leaders are regularly collaborating with their suppliers
Collaboration
Innovation
Innovation is a key business driver for 68% of companies but only
10% of companies believe they have an effective process to
manage supplier innovation. Amongst leaders this figure is 52%
© 2015 State of Flux Ltd
Segmentation criteria
RELATIONSHIP DEVELOPMENT & CULTURE
Just 50% of companies believe they are customer of choice to
more than half of their key suppliers. Amongst leaders it’s 95%
Mutuality
64% of companies share SRM benefits with suppliers.
Amongst leaders it’s 95%
Only 34% of companies conduct 360° relationship assessments
with their key suppliers
52% believe that SRM is making negotiations more constructive
and 46% believe it results in better outcomes for both parties
© 2015 State of Flux Ltd
Segmentation criteria
SUMMARY
What is the key to a step change?
Steady progress but not spectacular
Executive support and a strong value proposition
number 1 – lack of budget and resources
number 3 – organisational change
number 4 – measuring benefits
number 5 – lack of supplier support
number 2 – lack of people and skills
© 2015 State of Flux Ltd
THANK YOU
Communication Strategic thinking Trust building Influencing Cross-functional working Problem solving Commercial / contract Leadership Facilitation Negotiation Change management Market & category knowledge Project management Understand sales and KAM General product/service Account planning Deep product/service
0 100% 50%
31%
52%
15%
1% 0% 1%
Become much more important
Become more important
Stay the same Become less important
Become much less important
Don't know
CS-12-B
CURRENT STATE 2015
19%
61%
4%
14%
2%
Business drivers &
value