State of Flux – Annual SRM Report Out Now!

The annual State of Flux global SRM (supplier relationship management) Research Report is out now, titled this time “the Journey to Customer of Choice.”  At over 200 pages, it is again both a vital piece of research, and a good practice guide to the topic from a firm that has made this very much its domain in terms of deep expertise.

In some ways however it gets harder every year for State of Flux to say something new and interesting about the topic. For instance, they say that “biggest barriers and challenges are still finding the right people with the requisite skills for SRM, and under-investment in training and enabling technology (only 8% of respondents make use of technology)”. I think we have heard that for some time now, not that it isn’t still an important point. But progress is clearly slow in certain areas like these.

On the other hand, every year that goes by gives more past comparative data to look at, giving us a sense of how SRM is changing and progressing over the years. So there are points that are different and illuminating when we look at the data over the years. For instance, perhaps the most interesting finding for me was that risk is no longer the main driver of SRM activity. It is still important, and still number one in Financial Services for instance, but has been overtaken overall by the aim of delivering more value from SRM and key relationships, with a stronger focus on innovation and collaboration. “Innovation is a key topic for 68% of respondents overall and 81% of leaders, however, it’s still a challenge to harness it.”

That seems to fit with what we’ve seen and heard (for instance, at recent conferences), both in terms of its importance and the trickiness around really extracting value from supplier innovation. But the healthy overall trend to more collaboration, and the search for value, perhaps also fits with a recovering economy putting the corporate focus back on growth rather than risk and cost cutting.

And there is more good news. Overall, the SRM picture is improving according to the results. “Of the companies identified as leaders in 2013, most would only be featuring in the fast followers group this year had they not improved their capability.” Leaders are making more financial gains, with 46% of that group reporting 4% or more in the way of post-contract financial benefits.

But the “gap between leaders, fast followers and followers is widening, and is increasingly defined by the value being realised.” Incidentally, we believe that is true of general procurement performance as a well, not just SRM. The best are getting better.

As we said earlier, this report is not just a list of the research findings. There are a number of case studies , looking at practice in organisations such as the BBC and Dairy Crest. There’s a useful list of “Ten SRM Essentials,” and a really interesting section about SRM for luxury brands, drawing on case studies from a number of top-end household name firms like Harley-Davidson, Bang & Olufsen and McLaren. It is also good to see an article on responsible procurement and supplier collaboration from the excellent Alis Sindbjerg Hemmingsen, Founder of Responsible Procurement Excellence (who we must persuade to write for us again soon)!

We will no doubt come back to the report again, but for now, congratulations to everyone involved – this is again one of the most interesting and best presented research publications you will find this year in our field or indeed across business generally. Find out more here.

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