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2011 | Rebecca Ellinor
supplier relationship management (SRM) are reaping all sorts of benefits,
according to consultancy State of Flux.
third annual global
survey, out today, quizzed 348 procurement, supply chain and SRM professionals
at 274 organisations. It found that mature SRM programmes are
getting tangible cost, risk, innovation and other benefits from collaborating
more closely with key suppliers.
Over 80 per cent of ‘SRM leaders’ (those that place their SRM
initiatives in the top half of State of Flux’s maturity scale, comprising just
under a quarter of the survey sample) reported cost reduction benefits. The
research found post-contract financial savings are typically in the region of
2-6 per cent of annual spend with a supplier, although a fifth say they have
achieved 8 per cent or more.
is the second most common benefit, with 70 per cent of SRM leaders citing this,
followed by cost avoidance (66 per cent), supply chain efficiency (64 per cent)
and innovation (58 per cent). Among the ‘SRM followers’ (organisations that
rate their SRM initiatives in the bottom half of the maturity scale), the
comparable figures are 20-30 percentage points lower. Skills shortages – particularly communication and influencing skills –
are the main internal barrier to progress in SRM.
Twice as many SRM leaders say they have received ‘customer of choice’
benefits, such as access to the supplier’s best people, priority allocation of
scarce materials or production capacity and first refusal on innovations during
the past year. Leaders see innovation as the biggest potential source of value
from SRM activity in the next 12 months, whereas for the followers it’s cost
State of Flux managing director Alan Day, said: “Leaders are
demonstrating that their investment pays off in terms of business benefits. In
particular, they are seen as a customer of choice by key suppliers.”
Day said to position your
company as a customer of choice you need to consider how you deal with
suppliers. “Individual behaviours and organisational practices need to be fair,
open and honest, so that they build trust and create an environment in which mutually
beneficial collaboration can take place.”
Click here to request the full report.