Study shows SRM leaders

15 December 2005
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15 December 2005

Companies that invest in supplier relationship management achieve greater savings and respond more quickly to changes in the marketplace.

The study by Accenture found that leaders in SRM achieve savings of 3 per cent on their annual procurement spend, whereas other companies achieved only one per cent.

The survey, conducted earlier in the year in conjunction with SM, analysed data from 229 senior procurement executives from a range of industries in 13 countries. All firms thought additional savings - around 1-20 per cent - could be made through effective SRM. This equated to an average of ?200,000 to ?3-7 million on top of current savings.

The study classed firms that achieved more than 50 per cent of procurement benefits from post-contract award activities as "SRM leaders". Most leaders were found in the media/entertainment, car and pharmaceutical/health industries, with property/facilities management, banking/insurance and manufacturing having fewest.

By country, Finland and Sweden have the most leaders while Norway has none. One finding showed that value is often added by departments other than purchasing, so it is important for procurement to work with colleagues from other disciplines.

While the majority of firms expect the future focus on SRM to increase, there is a shortage of staff with relevant expertise.

Rob Woodstock, senior executive at Accenture, who led the survey, said firms that successfully position their supply chains as a strategic capability outrun the competition.

"They may not be more successful at predicting business conditions, but their supply chain mastery enables them to respond quickly to marketplace changes."

This means the leading firms are reaching customers with the "right-priced products, services and capabilities," he said. The study found that those doing well adopted a holistic, strategic approach to SRM. Reduced risk, increased speed to market and access to new technology were the other key benefits. "Although not a panacea it is a differentiator," it concluded. In a highly competitive environment it is one step nearer toward achieving high performance."



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