Measuring for Success – the SRM Role

Mel Shutes, Executive Consultant & Head of SRM, State of Flux, consulting firm and supplier relationship management expert, recommends giving procurement teams a chance to step up to the role of supplier relationship manager and reminder us that what gets measured gets done.

Where will we find people with the right skills for the challenging role of SRM? This question is frequently asked, most recently at a London event attended by CPOs and heads of SRM.

We can be quick to write off or not consider the current procurement team for the role of supplier relationship manager, characterising them as “traditional” or “old school procurement” and sometimes quite disparagingly as “dinosaurs”.

Procurement has always attracted a wide range of people with different skills. Some come with a strong analytical focus, others are more entrepreneurial and are looking to do a deal, some revel in the cut and thrust of negotiation, others enjoy developing a deep product knowledge, some like to work more strategically.

We should look at why some of the behaviours adopted by procurement have developed. Consider the old adage “what gets measured gets done”. If we measure performance on savings, then that is all people will focus on. And, they will adopt whatever means are expedient to achieve their objective.

Procurement has been on a journey for more than 20 years to change itself from being seen as the ‘buying office’ carrying out transactional and administrative tasks to the more ‘strategic’ function it is seen as in many companies today. However, the focus over that period and today remains on savings and this is how the performance of the majority of procurement people is still measured.

As the procurement profession works more and more strategically, developing and implementing category plans, rationalising the supplier base, putting in place more long-term contracts that consolidate category spend and reduce the tail of small spend suppliers, we need to look at what comes next?

The natural evolution of the procurement role is to extend it to cover the full lifecycle of a supplier and the business interaction with it. This means an increased focus on supplier relationship management including ensuring that not only the savings secured in the contract are delivered but the other elements of value too. It will also mean an increased emphasis on the very strategic relationships that can deliver value that goes beyond the contract including, amongst others, reduced risk and more supplier innovation.

So if we return to the original question. Where will we find the people with the necessary attributes to succeed in the new challenging role? We are wrong to dismiss our procurement teams as a source of people that will be able to step up this new role. We need to look at how we define the role and the job profile including the performance criteria. Have we identified the skills required and assessed the capabilities of our current procurement teams to ensure we identify those people with the skills to be successful as supplier relationship managers?

However, none of this will result in changed behaviours and the delivery of value if all we continue to measure is savings. We need to develop a range of performance measures for supplier relationship managers that encompass the broader SRM value proposition including supplier innovation, reducing risk, internal customer satisfaction, quality of relationships etc.

Let’s not ignore the diversity and talent in our own procurement teams and give those with potential the chance to step up into a challenging new role and most importantly, let’s support them with the right measurement and skills development programme to equip them for success.

State of Flux and IACCM have joined forces to develop an internationally accredited training programme for supplier managers.  This can be the stepping stone that elevates a procurement professional to an SRM professional.

 

For further information on SRM accredited training, please contact State of Flux at enquiries@stateofflux.co.uk or call +44 207 8420600.

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