Buyers 'less able to identify benefits from SRM'

17 December 2021

The number of buyers able to identify value from effective supplier relationship management (SRM) has fallen over the last year, according to a report.

State of Flux’s Global SRM Research Report canvassed 475 procurement executives across more than 350 companies and found the proportion of leading organisations able to identify benefits dropped five percentage points.

The report – which broke down respondents into leaders, fast followers, and followers – said leaders had more mature and successful SRM programmes.

Fast followers had strong evidence of SRM development while followers had either limited SRM ambition or were at the start of a journey.

The percentage of leaders able to identify a benefit from SRM fell from 81% in 2020 to 76% in 2021. Among fast followers the drop was steeper, from 72% to 65%, while for followers the fall was smaller, from 44% to 42%.

When asked to value the financial gains from SRM, 49% of leaders saw benefits above 4%, compared with 48% who cited the same figure in 2020.

However this slight increase might have been at the expense of those who saw benefits over 6%, which fell from 25% to 15%. A third (34%) put benefits at 4-6%.

Just 13% of fast followers and 5% of followers believed SRM programmes delivered financial benefit above 6%.

The most common benefit from SRM programmes overall was increased commitment and support from suppliers – cited by 63%.

However fast followers and followers were more likely to identify improved account management as the key benefit.

The top three business drivers for implementing or developing SRM were:

1. Risk management and reduction

2. Cost reduction and avoidance

3. Supplier innovation and continuous improvement

One of the biggest differences overall between leaders and followers or fast followers was identifying financial benefits apart from cost reduction as a result of SRM programmes.

“[That] is clearly an area for fast followers and followers to learn from leaders and develop... in future years,” said the report.

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