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Supplier Management Supply Base Strategies, Performance Measurement, Supplier Relationship Management, Supplier Integration, Supplier Development

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Old 02-23-2009, 09:57 PM
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Default Supplier Relationship Management

Companies Are Confusing Supplier Performance With Supplier Relationships, State of Flux Study Finds

Focus is on holding suppliers to account, rather than collaborating to create value


LONDON, 4 June 2009 – Many organisations see supplier relationship management (SRM) as a process focused on monitoring the performance of their suppliers, rather than as a collaborative, two-way relationship that can deliver value for both parties, according to a study released today by State of Flux.

The global survey of 223 procurement, supply chain and supplier relationship management executives found that almost two-thirds (62%) admitted that they did not have an accepted definition of SRM in their companies. When asked about the topics most commonly discussed at review meetings with key suppliers, performance and service issues topped the list, followed by cost reduction opportunities. Business strategy and plans, new supplier products/services and value delivered came lower down the list, while customer performance – how easy the buying organisation was to deal with – came last.

“Many organisations have confused supplier performance management (SPM) with supplier relationship management (SRM),” said Alan Day, Managing Director of State of Flux. “SPM is about getting what you have been promised in a contract, whereas SRM is about collaboratively driving value as part of a two-way relationship.”

“Whilst good SPM yields both bottom-line savings and top-line competitive advantages that most organisations cannot afford to ignore, it is only one aspect of SRM. Engaging proactively with your most strategic suppliers to capture innovation, jointly develop new products and services, improve the efficiency of your operations and speed up your time to market requires a much broader and more relationship based approach.”

Nine out of 10 respondents to the survey said SRM would grow in importance, but a significant number of procurement functions were ill-equipped to manage it effectively. Half admitted they were unable to measure the benefits, despite an intuitive belief that value was created through closer relations. Fifty-seven per cent acknowledged that the time they spent on SRM was insufficient, 47% had not trained staff in relationship management skills, and 53% did not have designated teams or account managers in place to deal with key suppliers.

“In practice, supplier relationship management tends to be an add-on to the day job of buyers and category managers, rather than a core role. When you compare this with the highly trained, well informed and full-time key account managers on the sales side, there is a danger of a real imbalance in the relationship,” said Day.

This was compounded by the fact that almost half of respondents (47%) said they were managing more than 25 supplier relationships, while 8% were managing over 200. This meant they had little time to devote to developing relationships or looking for ways to deliver benefits above and beyond incremental cost savings. Only 11% believed that existing technology strongly supported SRM.

On a positive note, the survey found that 28% of those organisations that were able to measure the value of SRM said it amounted to more than 3% of the total annual spend with key suppliers. As well as joint cost savings, the main benefits were reduced supply risks, greater supply chain efficiency and improved quality.

Almost half (47%) of respondents also reported that their SRM programmes had sponsorship from C-level or other top executives, rather than senior or middle managers – a key ingredient in ensuring that such initiatives become part of the organisational culture and way of operating.

Some noted, both in their survey comments and in workshops held to discuss the findings, that CEOs, CFOs and other senior executives instinctively understood the value that could be derived from closer relationships with strategic suppliers and were giving it their personal attention. Such was their belief that formal SRM business cases were not always required.

“We found some impressive examples of successful supplier relationship management in action,” said Day. “The fact that more organisations are recognising the value that can be gained from SRM and embracing a different approach to working with key suppliers is encouraging. The challenge now is to turn these pockets of excellence into practices that are replicated more widely.”


About the Survey

In March and April 2009, State of Flux surveyed 223 procurement, supply chain and supplier relationship management executives across 15 industries and nine countries to understand how different organisations approach supplier relationship management (SRM), and specifically the business case for change. Industries represented included manufacturing, financial services, oil and gas, IT services, FMCG and healthcare, and respondents were based in countries including the UK/Europe, US, China, South Africa, Australia and New Zealand. In addition to the online survey, 15 cross-organisation workshops were held to supplement the results and discuss key points arising from the survey.

About State of Flux

State of Flux is a supply chain change consultancy, headquartered on the Strand in London, UK, and with global operations and offices. The company has experienced rapid growth since its inception in January 2004 to become one of the recognised leaders in the procurement and supply chain fields. Its expertise lies in helping FTSE 100 and Fortune 500 organisations' procurement and supply chain functions and professionals get better aligned to corporate goals, drive best practice and focus on delivering bottom-line results. Services include: Research, eSourcing (including eAuctions and eRFx), Supplier Relationship Management, Ethical Supply Chain, Supply Chain Risk, Contract Management, Tax in the Supply Chain, eLogistics and Training (for both buyers and salespeople). For more information, visit www.stateofflux.co.uk


For a copy of the full report, Value Added: Supplier Relationship Management, or further information, please contact:

Alan Day
Managing Director
State of Flux
alan.day@stateofflux.co.uk
+44 (0)20 7842 0600

Last edited by Alan.Day : 06-04-2009 at 05:55 AM. Reason: Survey finished
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  #2  
Old 04-21-2010, 12:00 AM
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Default Re: Supplier Relationship Management

State of Flux has launched their 2010 survey on Supplier Relationship Management (SRM) and it would be great if you can complete it (As per last year, your response will be confidential). We know that SRM remains a hot topic for organisations, and creating the business case for change in this area is often challenging. All of us understand intuitively that SRM is the right thing to do, but it is difficult to put absolute values on the benefits that can be achieved through an SRM improvement programme.

In 2009 State of Flux focused their survey around the 6 steps for SRM success and for the 2010 survey they have extended the survey to not only focus on how organisations approach SRM and their business cases for change, the implementation and overall approach to SRM, but to also allow organisations to benchmark where their programs are in comparison to the leading practices.

It would be appreciated if you could take 10 to 15 minutes to complete the survey. State of Flux will happily provide the results upon completion of the survey and like last year they are planning to run some cross organisational workshops to discuss further so I’m sure they will be happy to invite you to join those.

The link to survey is http://www.stateofflux.co.uk//surveys/srm_survey.aspx
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Old 06-15-2011, 10:35 AM
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Default Supplier Relationship Management

*
We have just launched State of Flux’s 2011 Global Supplier Relationship Management (SRM) Survey and I would like to invite you to participate.
*
Over 300 organisations took part in last year’s survey and gained valuable benchmarking data about SRM practices and the value that can be delivered by implementing them effectively. You can download an executive summary here*http://bit.ly/m6gIqa – if you haven’t already and would like to see the full 2010 report, please let me know and I will be delighted to send you a complimentary copy.
*
This year’s survey focuses on the current state of SRM practices, value & benefits, stakeholder engagement, governance & process, people & skills, and tools & systems. It also includes a new section on “relationship characteristics” and some questions on the much talked about (but little researched) theme of “customer of choice”.
*
To participate in the survey, click on this link: http://www.stateofflux.co.uk/surveys/srm_survey.aspx
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The survey should take 20-30 minutes to complete. Your responses will be treated confidentially and every participant will receive a complimentary copy of the 2011 survey report, containing full findings, year-on-year analysis and case studies from leading organisations.
*
Like last year we are also offering you the opportunity to take part in a face-to-face or online workshop prior to the report’s publication, where you will be among the first to see the results and have the chance to discuss key issues with SRM practitioners from other organisations.
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If you have any questions about the survey, or if you would like to discuss SRM in more detail, please get in touch. And please feel free to forward this invitation to any colleagues in your organisation who may be interested in taking part in the research.
*
Thanks and kind regards,
*
Alan Day
Managing Director
State of Flux
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