State of Flux SRM study – mixed messages?

State of Flux, the procurement consulting firm run by Kiwi dynamo Alan Day, has published a report based on a very extensive survey of Supplier Relationship Management across 300  organisations.  In summary:

"Progress has been made in supplier relationship management (SRM) initiatives during the past 12 months, despite a difficult business environment, but the vast majority of organisations are at an early stage of development and there are still major barriers to overcome".

I thoroughly recommend the report to anyone interested in SRM.  It has a good blend of survey data, analysis, and comment around what the data means.  It is also well-written - I detect the hand of Geraint John, ex Editor of Supply Management, who is now a senior exec at Sate of Flux.

What interests me though is why SRM is still struggling to get real traction in so many organisations, as the quote above highlights?  While there are some 'leaders', as the survey identifies, almost 80% of organisations believe they still have a long way to go.   I first introduced an SRM programme in 1996 (don't think it survived long) so it is not exactly a new idea.  Is it just that we don't understand it or as a profession we still don't have the capability to make it work?

Or is it more fundamental; are the underlying assumptions about the value of SRM incorrect?  For instance, 70% of respondents say that their main reason for doing SRM is  "cost saving". Now there's nothing wrong with that; but in that case, have they really analysed whether SRM is a better route than an overt, aggressive sourcing strategy based around regular competition, strong contractual and price management, or active benchmarking of supply and costs?  And if the suppliers know cost is the main driver, what real incentive do they have to truly develop the 'relationship'?  Only 7% of organisations always share savings from SRM with suppliers; another statistic that suggests the supply side may feel somewhat cynical about the whole process.

It does also strike me (a theme I keep coming back to) that technology is changing the nature of the possible for the procurement professional, and I'm not sure some 'traditional' SRM thinking has caught up with this.  I'm going to do some serious thinking around this topic through the Autumn, and if I come up with anything interesting I will let you know.  Otherwise it will have to be more posts about music....

And finally, this is one of those areas where in my view the specialist consulting firms seem to have at least as much capability as the big boys:  do consider both State of Flux and Future Purchasing (who have also done some excellent work in this field) if you're looking for  SRM consulting.

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