New Research: Can Supplier Management Be Saved?


As much as we are firm believers in prioritizing supplier management activities in procurement and supply chain, there is no doubt that the areas of supplier development and supplier relations are slipping relative to the popularity of other forms of direct vendor engagement, such as negotiation and transactional automation. Moreover, technologies that support supplier management come with an entire host of challenges.

The fundamental question is this: Can Supplier Management Be Saved? This question is the topic of a recent Spend Matters / MetalMiner research download (free, with registration), which you can access via the previous link. Featuring MetalMiner and Spend Matters PRO analysis of the supplier management market, the PDF includes three individual research briefs:

Honda Ltd. Slipping in Supplier Relations, According to New Report (Lisa Reisman, Executive Editor, MetalMiner)

Toyota Motor Corp, BMW Blaze Trail in Automotive OEM-Supplier Relations (Lisa Reisman, Executive Editor, MetalMiner)

Can Supplier Management Be Saved? The Problems with SIM, SRM, and Risk Management (Jason Busch, Executive Editor, Spend Matters; Thomas Kase, Principal Analyst, Spend Matters)

By first exploring the challenge of supplier management in the automotive sector (there will be some success stories as well) and then delving into fundamental issues with the typical technology underpinnings supporting such programs, we hope to bring the topic to surface by bridging the manufacturing and systems world.

But perhaps it’s worth stepping back and examining first the origins of the term and supplier management art.

When one hears the term “supplier collaboration,” a few companies come to mind. For example, Honda and Johnson Controls are two firms in the automotive industry that have set the standard for supplier collaboration. Many studies, books, and white papers have touted the benefits of strong supplier relations, which often include greater profitability for both partners, innovative product development ideas, cost reduction opportunities, and more.

The value derived from strong supplier relations reminds us of a case study from the classic negotiation book, Getting to Yes by Roger Fisher, William Ury, and Bruce Patton. I recall that a case study involved dividing into teams with the objective of getting as much of an orange as possible (yes - we refer to the fruit!). Though the book covers the topic of negotiation, it serves as the foundation for positive supplier relations.

When different teams sit opposite one another to negotiate the terms of how the orange will be divided, most teams conclude the only option involves cutting the orange in two. But as Fisher and Ury describe, through a series of open and honest communications, both parties end up learning that they each actually want a different part of the orange – one the peel and the other the pulp.

And so the process of creating strong supplier relations (supplier management, supplier relationship management, or whatever term you prefer) rests on the ability of both parties to find ways to better understand how the other party sees the orange (so to speak).

This compendium attempts to examine some of the key advantages and recent developments in the field of supplier relationship management with two specific examples. Then it gives an in-depth look at some of the problems companies face when it comes to supplier management – and what they can do to address them.

Curious to learn more? We encourage you to read our combined thoughts on the topic: Can Supplier Management Be Saved? Analysis and Technology Overview (free download – registration required).

Voices (2)

  1. Declan Kearney:

    Lisa & Jason, really well done for putting together these very valuable insights. From my experience, there is no doubting the value that can be created through effective implementation of SIM, SRM and Risk Mgt processes and enabling technologies. These 3 elements of Supplier Mgt are inherently inter-linked and, in many ways, are notably less valuable in isolation of each other. In terms of tech providers, I agree that niche providers are struggling to scale – the most innovative providers are the ones that are unfortunately still in the ‘educational’ sales pitch mode. Perhaps it will take the acquisition by an established tier 1 e-procurement/ S2P provider of one of the niche Supplier Mgt providers to provide the spark needed in this space – not great for innovation but good for market penetration. SIM, SRM and Risk are here to stay and represent a massive opportunity for the right provider. In turn, those companies, including and beyond automative corporations, that embrace these elements will certainly realise competitive advantage, increased risk mitigation and improved business continuity capabilities.

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