Creating Public Sector Value Through Supplier Relationship Management

Last Thursday Public Spend Forum (PSF) held a webinar on Creating Public Sector Value Through Supplier Relationship Management.

It didn’t tout the usual mantra of ‘engagement, engagement, engagement,’ or ‘collaboration, collaboration, collaboration' -  while those are important, it dove deeper into the fundamentals of a genuine, tried-and-tested successful methodology. And it did this by way of a (sort of) case study from Steve Duckworth, Head of Supplier Partnering Models at the UK Cabinet Office. Steve has tonnes of experience of working with suppliers in the public sector, from roles in the Office of Government Commerce, to category management at the Government Procurement Service,  through to his current role.

He gave a succinct but detailed (and honest) account of lessons learnt during his public sector SRM model implementation, its embedding and successful (and ongoing) execution. We won’t go into the specifics here, as fortunately Public Spend Forum has recorded the webinar and you can listen to it in full (see the video at the end of the article). However, here are the key recommendations that we took away from his discussion:

  • He couldn’t emphasise enough the importance of ‘value’ to the organisation over ‘savings.’  That means taking the time to define right from the outset what the value of working with a supplier really is – being able to explain just why you are working with that supplier, rather than the savings you will get from them (only some parts of the organisation care about that).
  • Once the ‘value’ (whatever that might be for you) has been identified, it’s most important to articulate that, to communicate it across the organisation. Everyone has to believe in the value of that relationship working. “Really deep dive into the relationship,” he advises, “and strive to become an expert on how that relationship is performing.” That is a vital first step to your SRM approach.
  • Get the right people on board. You need the right leadership and problem solvers on board – or the model just won’t work, he explained. No amount of collaborative working with suppliers will change the relationship.
  • There are no quick wins, it all comes down to incremental value, which can take years to build. But identify what really matters and build on that gradually. That’s what will transform a relationship. Then, when trust is established, your supplier will be more open with you, and that is the real two-way value in a relationship.

Then there is the question, of course, of how much that supplier ‘values’ its relationship with the organisation! But that’s another discussion, only touched on in the webinar.

Then Steve’s final piece of advice was:

  • Start small!  Find a few suppliers and work with them to add value – then build. These are your pilots, don’t try to build your SRM model with all of your suppliers right from the beginning. Start by identifying the suppliers that need and want to work with you.  And that’s not the same as those suppliers who need to ‘get well’ before you start your SRM programme. There will be those that are ready for it now.

The webinar was hosted by Raj Sharma, CEO and Founder of PSF, who also interviewed Alan Day, CEO and Founder of State of Flux, a firm that has spent years analysing, promoting and disseminating good SRM methods. Alan also gives a comprehensive outline of what good SRM looks like, and he shares what they have found to be the 6 pillars that hold up a successful SRM programme: the Value Proposition, Engagement, Governance and Process, People, Technology and Collaboration.

Without going into too much detail, because you can listen to it on the webinar recording, here's an outline of those pillars:

  • Value proposition is basically your sales pitch for SRM.
  • Engagement is obvious – but needs to be at all levels, including getting the ‘voice of the supplier’ heard i.e. what’s important to them.
  • Governance and Process should involve segmenting your suppliers (including prospective ones – they bring innovation), understand where they sit in terms of criticality, but also in terms of: do they even want to be one of your strategic suppliers? Will they be delivering innovation a few years down the line?
  • People is about roles and responsibilities, both on your side and the supplier’s. Define a hierarchy and what happens at each level. Have job descriptions and embark on training them for those roles.
  • Technology is needed above all for consistency of approach – it has to be right for each area you want to manage, be that risk, contracts, performance, innovation or onboarding. They may all require different software – remember procurement software isn’t the same as SRM software.
  • Collaboration means doing a 360-degree survey of what both parties perceive to be the needs of the relationship.

Alan gives far more detail on each, but the one critical point he makes is that you must do all six for the model to work!

The webinar can be listened to in full via the video below. And do stick around for the end to hear audience questions answered. State of Flux has recently run its annual global survey on supplier relationship management practices (which you can download here); it has revealed that many organisations still lack a strong foundation upon which to build their SRM programme.

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