Supplier relationship management (SRM) is the top way purchasing can generate value beyond savings, according to procurement membership organisation CASME.
Graham Crawshaw, services director at CASME, said data from more than 160 member organisations across the globe found 79% believed encouraging supplier innovation was the key benefit of SRM. The next benefits were increased supplier engagement (77%), effective risk management (66%) and opportunities for collaboration (62%).
Speaking at the CIPS Annual Conference Crawshaw said: “This [SRM] is the way to get value from procurement.”
Service quality was the top KPI for tracking SRM activities (80%), followed by cost reduction (61%) and provision of supplier innovation (55%).
In a session on value beyond savings, Crawshaw said: “There is no way you can avoid the savings. However, that’s not going to get you on in the business and get procurement recognised for the value contribution it can bring.”
The most popular approaches for encouraging innovation from suppliers were discussions during regular business reviews (82%) and identifying strategic suppliers and sharing information beyond normal transactional data (82%). Next came hosting supplier innovation days (64%) and inviting ideas during the RFP process (64%).
Crawshaw spoke of the importance of being valued by a supplier. “Is your supplier seeing you as a customer of choice? Are you easy to work with? Do you get that top management support for managing those suppliers?” he said.
“It’s important you think from your supplier’s point of view. Just because you spend a lot of money, it doesn’t mean you’re someone they want to work with. With someone like Microsoft, however much you spend you’re unlikely to be a customer of choice.”
Crawshaw said risk management was “the biggest opportunity for procurement”.
“You might consider it a pain to deal with. Nevertheless procurement can offer so much by mitigating risk in the supply chain,” he said. “Technology is being developed that will allow you to do continuous assessment. It’s the ability to manage those risks and have conversations with stakeholders that demonstrates the value procurement can bring.”
Concerning stakeholder engagement, Crawshaw said: “Why is it we’re still banging on about this subject? Everyone thinks they can buy. Everyone thinks they can negotiate.
“You need the trust of the stakeholders you’re going to work with. Use the right terminology. Think about their business objectives. Don’t get backed into a corner where you only help in certain situations. If you always fight small fires you will be known as the person who always fights small fires.”
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