Exploring SRM Trends: Exploring Data and the Market Evolution

State of Flux (a consultancy and software vendor) has developed a reputation for putting out one of the most useful annual surveys in the procurement market, dedicated specifically to looking at the state of supplier relationship management (SRM). Alan Day, the fearless leader of State of Flux, is a big personality who is passionate about the topic and the overall sector. We’ve enjoyed covering the results of the SRM study in recent years and look forward to next year’s results.

Alan and his team are currently gathering data for the next iteration of the annual survey, hoping to gather as much data from both buy-side and sell-side participants (companies can click the previous links to participate, get a copy of the results and benchmark their SRM capabilities).

We recently had the chance to pose a number of questions about the state of SRM to Alan and the State of Flux team. In exploring the topic with them, we were especially curious about trends and changes year-over-year, as we’ve seen a large uptick in supplier management adoption and interest in recent quarters – and wanted to know if their data and observations suggest the same thing.

Spend Matters (Jason): What jumped out most in last year's results compared with the previous years?

State of Flux (Alan): There were some really interesting developments this year, including how many more businesses are defining SRM as collaboratively working with key suppliers. But the two things that really jumped out for me concerned the “leaders.” Firstly, the gap between leaders and followers has widened. But more interesting is the nature of the gap. This year it is much more clearly defined by results. In previous years, “leaders” have been more defined by inputs (how they were building their programs). Now we’re seeing around 60% of “leaders” reporting post contract signature benefits in excess of 6%.

Spend Matters: How has the procurement view of SRM changed in the past few years? Where does it stand compared to other initiatives?

State of Flux: Our research shows that for the most part procurement is the process owner or sponsor for SRM. I think they recognize it as a key enabler for them to continue delivering sustainable value to the business. A number of CPOs have indicated that they see it as the future role of procurement as the so-called “easy” savings opportunities of the past decline.

Spend Matters: How has the non-procurement view (e.g., finance, legal, manufacturing, etc.) of SRM changed in the past few years? Has it impacted the overall view of procurement as a role and function within the organization?

State of Flux: There is no doubt that stakeholder engagement and support remains a challenge, although survey respondents last year did say they were still making significant progress. It’s not a difficult concept to understand and agree with, so most functions are interested. The challenge is bringing it to life. The best are constantly aligning the value that SRM can deliver to the stakeholder’s key business drivers.

Spend Matters: Does geography play a role in the view and adoption of SRM approaches (e.g., Europe vs. US vs. Asia)?

State of Flux: The majority of our respondents last year were from Europe and the USA. If we compare the two samples, I would say the USA is just ahead. This is based on the number of US firms in the “leader” group compared to the number surveyed. This year we are aiming for a bigger sample and have partnered with several organizations to give us additional contacts, especially in the USA and Australasia. My sense is that SRM, as we would define it, is still to really take off in Asia.

Stay tuned as our discussion with Alan Day continues. And participate in State of Flux’s latest survey here: buy-side and sell-side (click the respective links). 

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