Just one in eight firms get innovation from SRM

Will Green is news editor of Supply Management
6 December 2019

Only 12% of organisations say innovation is one of the benefits they get from supplier relationship management (SRM), according to a survey.

State of Flux’s 2019 Global SRM Research Report said “insufficient time and resources to engage suppliers” was the biggest barrier to innovation.

The report said more than one in four firms saw innovation as a “critical business driver” for SRM but half (50%) rated themselves as “less than five out of 10” for supplier innovation.

Alan Day, State of Flux chairman and founder, said: “No company can make it on their own. Leading firms know that they can get a competitive advantage over market rivals by working more closely with suppliers to create new products and build new processes.

“With disruption caused by mass internet adoption and economic globalisation never far away, businesses should not ignore such a rich seam of value. Yet, on the whole, they do.”

The research also found a “post contract technology vacuum”, with 21% of survey respondents using technology to help manage relationships and only 6% using it to manage supplier innovation.

“Over 50% say that their current technology solutions are failing,” said the report.

“While the adoption of technology to support SRM has increased over the last four years, it remains low at just one in five organisations. The management of supply chain sustainability and supplier innovation are the activities least likely to be supported by technology.”

The report said technology was the least developed of State of Flux’s “six pillars of SRM” – value, engagement, governance, people, technology and collaboration. It said 86% of organisations were using Excel as the main software for SRM.

The survey, involving 401 companies, found reduced risk was the most often reported (90%) non-financial gain from SRM. More than half (55%) of leaders, defined as the top 10% most mature SRM organisations, reported financial gains in excess of 4%.

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