Use IT to attract top-level SRM support

22 November 2016

Innovative technology could help buyers to attract senior management support and funds for supplier relationship management (SRM), according to research.

Supply chain consultancy State of Flux’s report, Digital SRM: Supplier Relationships in the New Technology Landscape, is a global study that examines how businesses are performing against six “pillars” of SRM - value, engagement, governance, people, technology and collaboration.

To significantly improve these pillars, the report recommended: developing a clear SRM value proposition; creating a stakeholder engagement strategy; creating an SRM people development strategy; and investing in technology that will allow supplier relationship information to be managed efficiently and enhance communication and collaboration.

When it came to backing and funding, SRM faced difficult competition from other priorities in a business, said the report. Any work done to improve supplier relationships needed to demonstrate value for money in order to win support from the business budget. 

Nevertheless, in a survey for the study, 85% of respondents reported progress on SRM in 2016 and 77% of businesses said that SRM would become more important over the next year.

However, 45% of respondents said IT support for SRM had either made no progress or become worse. The study also concluded that despite more acknowledgement of the importance of SRM, progress was “patchy”.

While supplier segmentation, developing supplier relationships and supplier governance were among the areas where most progress was being made, use of IT, capturing and reporting benefits of SRM, and supplier innovation were not faring as well.

Cloud computing, social media, big data and the Internet of Things were all tools that could be exploited to improve SRM, the research found. Cloud-based applications that could be accessed anywhere online were especially good for managing SRM activity, the research said.

Around 30 per cent of respondents also reported worsening progress in finding SRM skills. While some businesses were taking steps to address this, there were still concerns, with the report pinpointing a lack of a strategy for people development.

SRM was not an integral part of business strategies, and not enough businesses were able to articulate its benefits, the report concluded. And there was not enough focus on suppliers’ perspectives.

Despite research and development and innovation being a key priority for most management, businesses were not exploiting the ways in which improving supplier relationships could boost this.

In a world where the role of suppliers and third parties was becoming more important and markets were susceptible to disruption, the report warned that steady, incremental development of SRM would not be enough.

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