In part 1 of our look at the recent 2012 State of Flux Supplier Relationship Management report, we looked at some of the overall findings. In part 2 we looked at the factors that help define leadership in this field.
Today we’ll look at a couple of areas that still appear to be weak in terms of SRM practice. What is it that generally still isn’t too impressive or successful – even, in some cases, amongst the leaders in the SRM field? The two most significant areas State of Flux identifies are training and technology.
There is a stark difference between leaders and followers when it comes to training. Asked the question “to what extent have you invested in training and development specifically to equip your people for SRM?”, then 87% of organisations identified as SRM “leaders” invest “moderately” at least. That is true for only 36% of the SRM “followers”.
This doesn’t altogether surprise me. SRM has never lent itself to a standardised process model in the way that Category Management does. Standard models and well defined processes in turn make it relatively easy to define, develop and deliver training material to your practitioner population.
SRM doesn’t suit that standard approach. Every successful SRM relationship is different; the whole nature of it means that you tend to seek different outputs and benefits from each strategic supplier with whom you engage in a serious initiative. Whilst some processes may be common (the principles of governance may apply across the board), the actual detailed work to be done may be very different in every case. That in turn means it is difficult to pin down the skills and knowledge that would form the basis of effective training.
As Alan Day, State of Flux Founder says in his introduction,
We have not yet achieved the right balance in training our people. We need to put a much greater emphasis on investing in behavioural skills development whilst maintaining levels of competence in the traditional areas of negotiation and commercial skills.
So training needs to be more flexible, and probably based largely on behavioural skills rather than technical. Whereas in category management you can teach technical skills and tools such as spend analysis, economic or cost modelling and so on, SRM success depends on building trust, identifying innovative ideas and opportunities, strong personal engagement, persuading stakeholders in both organisations to collaborate... None of these things are easy to do, and the skills needed can’t be transferred through a half day training session in a classroom.
In terms of technology, similarly we know that when processes are easy to define, then systems and technology can usually help by automating and standardising. But as we said above, SRM is not a standard process. So the solution provider side has struggled to come up with tools that really address the core of SRM, and that comes out in the report – whilst there is perhaps less hard survey evidence here, the “Functionality and use of IT” factor does come near the bottom of the table in terms of areas of progress in the last year.
As well as the intrinsic problems with systemising SRM, we also see some confusion caused by the technology supply market. Solution providers can’t even decide what “SRM” is, and often continue to use the term to describe a whole range of different capabilities, including the entire end to end procurement process in some cases! When it comes to specific tools to assist with what we (and State of Flux) define as SRM, there is less out there on the market that addresses the real SRM issues.
Anyway, you can download the whole report here; and in part 4 we’ll take a brief look at the supply side, featured in the report this year for the first time.