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Supplier relationship managers deserve equal, if not greater, recognition than internal managers
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Supplier relationship managers: Leaders without direct control
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Impact on customer experience and business value
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Equitable support, resources, and recognition for SRMs
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Changing mindsets: The strategic case for elevating SRMs
Supplier relationship managers deserve equal, if not greater, recognition than internal managers
Suppliers, outsourcing organisations, third parties - over the last decade, organisations' reliance on them has grown exponentially. Covid has shown us how important they and their supply chains are to our organisation, and the reliance on them has only grown since then. Take outsourcing, which has expanded beyond traditional manufacturing and IT to include healthcare, finance, human resources and customer service, reflecting the growing trust that organisations have in external providers to manage diverse functions and focus on core activities.
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But there is an organisational leadership challenge. Traditionally, leaders of large internal teams have been seen as the backbone of an organisation, responsible for nurturing talent, driving productivity and embodying corporate culture. However, there is a growing and increasingly overlooked group of leaders - Supplier Relationship Managers (SRMs) - who manage large supplier partnerships or outsourced relationships. According to our extended enterprise research report, on average 50% of the customer experience is delivered by suppliers, and approximately 50% of an organisation's workforce doesn't work directly for the organisation, but through suppliers. This data underlines the strategic importance of SRMs, who often have as much - if not more - influence on customer satisfaction, operational continuity and corporate reputation than internal managers.
The 2024 global SRM research found that only 7% of organisations achieved 'Leader' status for supplier management. This means that only 7% (yes, you read that right, seven percent) of organisations had the people, processes, policies, technology and governance structures in place to be considered good at managing suppliers. The worst performing area is 'People', where we have found that organisations don’t:
Organisations must recognise and invest in these supplier relationship managers with the same (or even greater) level of resources, recognition, and support as internal leaders. Here’s why SRMs are crucial to an organisation’s strategic goals and why they deserve equitable status alongside traditional managers.
Supplier relationship managers: leaders without direct control
Managing a large supplier relationship requires sophisticated leadership skills similar to those needed to lead internal teams, but with additional challenges. Unlike internal managers who rely on organisational hierarchy to drive accountability and performance, SRMs often influence outcomes without direct authority, working across organisational boundaries to align objectives and maintain smooth operations.
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Influence and persuasion over authority: SRMs operate in complex environments where they must balance their organisation's expectations with the supplier's interests. They can't rely on hierarchy alone, but must cultivate strong relationships, negotiate diplomatically and foster a collaborative mindset. This requires a high level of emotional intelligence as they must navigate different personalities and motivations to achieve results.
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Cross-organisational coordination: SRMs are not only responsible for performance metrics but must also bridge the cultural divide between their organisation and the supplier. They translate the company's culture and values to the supplier's workforce, ensuring that the supplier's actions reflect the company's brand, values and commitment to customers. Without this alignment, the customer experience - and ultimately the brand reputation - can suffer.
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High-stakes decision making: SRMs make critical decisions that have a direct impact on customer satisfaction and operational efficiency. With suppliers now delivering a significant part of the customer experience, SRMs play a central role in managing the organisation's reputation and bottom line. Decisions made in supplier relationships often involve significant financial, legal and operational risks, making SRMs an integral part of organisational resilience.
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Not supported by contracts: Unlike internal managers who benefit from all employees having standard employment contracts and HR support in aligning team behaviour, culture and goals, SRMs work within rigid supplier contracts that emphasise deliverables and service levels rather than behavioural and cultural fit or shared goals.
Impact on customer experience and business value
When looking at the extended enterprise, supplier relationships are not just about cost savings and transaction fulfilment. They are a key part of the organisation's value creation strategy and customer experience delivery.
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Customer experience and competitive advantage: As the extended enterprise research report reveals, on average 50% of the customer experience is delivered by suppliers. When a supplier delivers critical elements of a product or service, they shape customer perceptions as much as the organisation’s own employees. SRMs are therefore essential to ensure that the supplier meets high standards, not only in delivery, but also in customer interaction and responsiveness. A lapse on the part of the supplier reflects poorly on the organisation's own brand, underlining the role of the SRM in maintaining a seamless, high-quality customer experience.
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Operational resilience and risk management: With an average of half of an organisation’s workforce typically employed through suppliers, SRMs play a crucial role in operational resilience. They are responsible for ensuring that these external teams have the resources, alignment, and commitment needed to support the company’s mission. In the event of a disruption—such as supply chain issues, regulatory changes, or economic shifts—SRMs act as the frontline coordinators, managing risk and adapting strategies to ensure minimal disruption.
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Innovation and strategic growth: Suppliers are increasingly seen as partners in innovation. SRMs foster collaboration and co-innovation with suppliers, leveraging the supplier’s expertise to enhance offerings or improve operational efficiency. This collaboration can drive product improvements, enhance supply chain sustainability, or reduce costs, giving the organisation a strategic edge.
Equitable support, resources, and recognition for SRMs
Despite their strategic importance, SRMs often operate with fewer resources, recognition, and organisational support compared to internal managers. Here are key areas where SRMs need parity with internal leadership to perform their roles effectively and drive greater business outcomes:
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Resources and training: Internal managers typically have access to development resources, from leadership coaching to budgeted training programmes. SRMs should receive similar support, with access to training in negotiation, risk management, cross-cultural communication, and relationship-building. These skills are essential to managing complex supplier dynamics, fostering alignment, and maximising supplier contributions to the business.
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Integration with corporate culture and values: Employees receive structured onboarding programmes, values training, and engagement initiatives to align them with corporate culture. For SRMs, it is equally essential to receive the resources and support needed to cascade these values to supplier teams. By fostering a shared understanding of values, SRMs can cultivate supplier relationships that reflect the company’s standards, ethics, and mission—creating a consistent experience for customers across internal and external touchpoints.
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Recognition and performance metrics: While internal managers have HR and a performance management system to evaluate them based on team performance, collaboration, and cultural alignment, SRMs currently getting little or no support in evaluating suppliers for the same thing. Suppliers should be assessed on similar criteria, including supplier behaviour/cultural alignment, risk mitigation, and value creation. Providing SRM’s with the training and the technology/tools to manage suppliers in a standardised way is critical to their success.
Changing mindsets: The strategic case for elevating SRMs
The extended enterprise research highlights that 50% of the workforce operates outside the company’s direct employment and plays a crucial role in delivering value to customers. This reality necessitates a shift in organisational thinking: suppliers are not just vendors; they are extensions of the organisation’s team, and those who manage these relationships are essential leaders.
By equating SRMs with internal managers in terms of resources, training, and recognition, organisations can unlock several advantages:
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Stronger supplier relationships and higher performance: When SRMs are supported and valued, they are better positioned to cultivate high-trust relationships with suppliers. This often leads to improved performance, quicker resolution of issues, and greater responsiveness to organisational needs.
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Enhanced risk management and resilience: With appropriate resources, SRMs can proactively identify risks within the supplier relationship, implement mitigation strategies, and adapt to disruptions more effectively, safeguarding the organisation from external shocks.
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Greater innovation and competitive edge: Well-supported SRMs foster co-innovation, driving value that goes beyond transactional relationships. Suppliers can become genuine partners in growth, contributing insights and innovations that bolster the organisation’s market position.
SRMs are leaders who deliver strategic impact, build resilience and shape the customer experience. With half of an organisation's workforce and customer experience now in the hands of suppliers, the role of SRMs is critical to ensuring business continuity, competitive advantage and customer satisfaction.
As organisations continue to rely on an extended enterprise of suppliers, it's time to give SRMs the same recognition, support and resources as internal managers. Investing in SRMs as equal partners in leadership will enable organisations to realise the full potential of their supplier relationships, driving both internal and external success. Recognising SRMs as true leaders is not only fair - it is essential for sustainable growth and excellence in delighting your customers.
The 2024 Global SRM Research Report is now available for you to view and download. If you have any questions, please contact us at: enquiries@stateofflux.co.uk