What makes an SRM leader?

SRM leaders are more likely to be seeing a return of more than 4% in terms of post contract value. They benefit more from supplier innovation, are less exposed to risk and are twice as likely to be regarded as a customer of choice by their key suppliers.

So what are SRM leaders are doing that makes them stand out from the crowd?

Over the last 8 years of SRM research, we have benchmarked the practices and attributes that are common to the leaders. The following captures some of the practices most often adopted by SRM leaders. For procurement departments looking to deliver more value from their supplier relationships, we encourage you to consider which areas are most relevant to your organisation and how can you look to address any gaps over the next 12 months.

Firstly, it’s almost a given that leaders have developed a structured, business-wide SRM change programme. While some companies have SRM embedded in their DNA and no longer see it as a programme, these are the exception rather than the rule.

Value – Almost all leaders have developed and documented a clear value proposition for their investment in SRM. This will align their SRM ambition that explores a wide range of value opportunities to their strategic business objectives.

Engagement– SRM has become established as a business-wide change programme actively supported at senior executive level up to and including CEO. Suppliers are regarded as stakeholders and have been engaged via a ‘Voice of the Supplier’.

Governance – An SRM programme and approach has been created based on a single vision of best practice and deployed consistently across the business.

People – The SRM role is defined, the skills and competencies required are understood and capabilities assessed. Based on this leaders will be investing more in training aligned to business and individual needs. Leaders are also far more likely to have defined the SRM role as a dedicated position.

Technology – Relatively few companies can be regarded as leaders when it comes to making the most of technology to enable SRM. However, the best are moving away from reliance on spreadsheets, email and SharePoint and investing in more dedicated fit for purpose technology. 

Collaboration – Process and behavioural change is taking place. Collaboration has been approached in a structured way often being ‘kick started’ by senior engagement and a commitment to joint planning and objectives.

A number of different attributes are demonstrated by leaders but if we had to choose one that stands out it would have to be consistency. SRM leaders are without doubt more consistent in terms of their processes and their behaviours.

The five key areas where consistency is required and will be paying dividends:

1. Segmentation – where an objective approach will create consensus and consistent supplier management strategies.
2. Governance– where best practice frameworks are applied and good oversight maintains consistency.
3. Technology – where a single information management and collaboration platform provides one source of the truth and a means to exercise easy oversight.
4. Reporting  – where a standard reporting regime drives contract, performance, risk and relationship management.
5. People – where the SRM role has a single definition, and practioners are trained to a consistently high standard. Where all those that interact with suppliers demonstrate the collaborative behaviours necessary to deliver sustainable value from strategic supplier relationships.

Companies that have implemented more successful SRM programmes will often point to the start of their journey being the realisation of how they were regarded by their suppliers. Over 75% of the leaders identified in our research had used a Voice of the Supplier approach to understand how they were perceived by their suppliers and if they were really a customer of choice.

Leaders recognise the value of being a customer of choice. The discretionary benefits afforded to customers of choice include, first refusal on innovation and improvement ideas, additional executive and account management focus, access to the best people and resources, preferential pricing and, that all important willingness to ‘go the extra mile’

Suppliers don’t announce who their customers of choice are. It more often needs to be ‘teased out’ through the appropriate questions. It’s these type of questions and others that highlight areas of strength and weakness that form part of our cost effective Voice of the Supplier study.

You can benchmark your organisation's approach to SRM by taking part in the 2017 SRM research study, the most in-depth of it's kind. Learn how procurement leaders of today are stepping further ahead, bringing alternative forms of value to their businesses. We recognise your time is valuable and will offer you a free benchmark analysis of your results along with recommendations for improvement. Complete the survey by 7th July 2017. All responses remain confidential. 

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