State of Flux SRM report (part 2) – identifying what makes an SRM Leader

In part 1 here we looked at some of the overall findings contained within the State of Flux 2012 Supplier Relationship Management (SRM) report. Today we’ll focus on those indicators that identify the “leaders” in SRM, as State of Flux call them. That should give us some clues as to the techniques and processes to follow if you’re looking to aspire to that status, or indeed build further on success.

And this year, for the first time, State of Flux didn’t purely rely on firms self-defining as “leaders” – they applied their own analysis to the responses to determine that category, which brings further rigour to the work.

“Our analysis shows that the leaders have established policies and practices in place and are delivering tangible value as a direct result of SRM. Encouragingly some companies’ achievements and approach stand out, hence they fall into the optimised SRM category… ”

State of Flux’s view is that the gap between the “leaders” and the rest is widening – that fits my personal observation about procurement functions generally.  As you might expect, leaders achieve more benefits from SRM, but perhaps more interesting is identifying the factors that seem to help organisations reach that leadership status in SRM.  Whilst the report goes though a wide range of factors, based on the State of Flux “Six Pillars of SRM” model, three or four stand out for me.

Leaders engage with stakeholders in the business ( as well as with suppliers obviously). It’s very rare that a successful SRM programmes can be run purely by procurement and the supply side. Involvement of key users or budget holders in the organisation is – in most cases – vital for the success of the programme. 63% of “leaders” (still not a huge proportion) have “strong and active” internal stakeholder engagement – only 10% of “followers” have that.

Governance (in a fairly broad sense) is also key.

“For example, leaders are twice as likely to have a defined, documented and implemented the organisational model for SRM. They are also further ahead in defining roles and responsibilities in the SRM process, with almost 95% saying they have completed this activity”.

What this suggests – perhaps not surprisingly – is that successful SRM doesn’t just happen, and can’t be run on a casual basis. Defining roles and processes, and developing organisational models that support the SRM activities, all helps to ensure the real benefits will be achieved. (I was an early adopter of SRM back in my CPO life – but  had some failures that in retrospect were probably because of issues like this – I didn’t insist on enough rigour in the process and governance).

People are also key – we’ll return to that in part 3, but for now, let’s just note that 60% of leaders but only 35% of followers recognise SRM as a formal discipline in their organisations.

Leaders are also more likely to take an overtly collaborative approach with suppliers – joint improvement projects and planning, or co-development of products/ services for instance.

“The proportion of all respondents that say they collaborate with their suppliers “always” or “often” has increased slightly to 57% (53% in 2011). But what is more notable is the increase in the proportion of leaders reporting  collaboration taking place “always” or “often”. This has increased from 80% in 2011 to 93% in 2012”.

As we said before, the survey report is a treasure trove of information and knowledge. I’ve read some of the case studies it contains now as well, which are also very good – the G4S / Olympics analysis being very powerful, in particular. So download a copy here, and see for yourself.

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