State of Flux new Supplier Relationship Management report out today

The latest State of Flux Supplier Relationship Management (SRM) annual survey was released today. It seems to get bigger every year, this one running to 166 pages of survey results from 400 plus respondents, plus analysis and seven case studies, each of which is pretty detailed and informative.

This is their definition of SRM:  “A discipline of working collaboratively with those suppliers that are vital to the success of the organisation, to build trust and maximise the mutual value of those relationships”.  State of Flux have made this area the heart of their consulting practice, and the survey has always been well worth reading, and this one appears at first sight to be no exception. Anyone who hasn’t seen it before should understand that it isn’t “just” survey results – it contains a considerable amount of good practice SRM advice and guidance, as well as the case studies.

The report makes use of the “leaders” and “followers” concept to categorise suppliers and draw conclusions on good practice – an approach used often these days in surveys (as in the IBM CPO survey). State of Flux identified 45 “leaders” representing 14% of the surveys, and took 60% as “followers”. The remaining 26% aren’t classified because “their practices are undeveloped” or they didn’t answer enough questions. This year, an “SRM Index” has been developed, which gives each respondent a “Score” out of 6 for each of the six pillars of SRM.

This shows that the “leaders” group has increased its average Index score from 3.5 to 3.8 this year, whilst the “followers” have improved by 0.8 to 2.8. It’s interesting that followers appear to be improving faster than leaders; and also that the gap between the two in  some areas such as actually isn’t that great. We’ll look at that in more detail too.

Perhaps the biggest challenge from State of Flux’s point of view is making each year’s report interesting and not just a re-run of previous editions.  The quality of the thinking overcomes that, although it is a bit chastening to see just how slow progress is in some areas – we’ll pick up on that in future posts, but for instance dis-satisfaction with technology to support SRM is actually growing.  (Perhaps people’s expectations are increasing because technology is improving in other aspects of procurement)?

It’s also a bit of a shocker to see that “less than half the respondents have created a specific value proposition for SRM” and that alignment with key business drivers and stakeholder priorities is just not there many cases. That is one sure-fire way to ensure SRM doesn't  achieve its potential!

The report will be featured here again in more depth, and you can download here (free to those who participated in the survey - chargeable to others)!

But there was other interesting news from State of Flux this week. That came with the appointment of Lance Younger to run State of Flux Technologies which “offers a fully integrated Supplier Management Platform that empowers enterprise connection, collaboration and value creation with suppliers”.

 We were pretty impressed when we looked at the platform, but it was very much a secondary product for State of Flux compared to the consulting offering. Younger, who has worked as a practitioner and consultant, and is well connected in the procurement world, is clearly going to provide new focus and effort – a good move, I’d judge.

First Voice

  1. Mary Wildsmith:

    Peter

    I think you are right about why satisfaction with supporting technolcgy is lower and a State of Flux representative also agreed when I talked to him at the launch – in previous years many companies have not been advanced enough in SRM to know what they could expect from an IT system. As their understanding has developed, they have become more aware of this. They have progressed with organisational buy-in and specialist recruitment but purchasing supporting IT comes later in the SRM implementation plan than these activities, hence today’s IT is not yet fit for purpose.

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