7 May 2020

Will you abandon SRM?


How much time and effort have you invested in building a supplier relationship management programme?

Is it a mature programme delivering financial benefits in the region of 3% to 6%+*? Or are indirect benefits achieved by making a concerted effort to become a customer of choice including things like reduced risk, better access to innovation and continuous improvement, securing supplier top talent, and that ‘cherished’ intangible of extra commitment?

Is it a programme in its early stages with high hopes of driving more value from key supplier relationships or initially turning them round?

As more and more countries start to move towards an easing of restrictions, businesses will need to take stock and look at what faces them to recover. It might be that your strong and resilient supplier relationships were a key part of how you navigated this crisis. It might be that your supplier relationships were not as strong as you thought and you weren’t after all a customer of choice. Either way, lessons will need to be learned and decisions taken about how you will act as a company going forward.

Will you walk away from the principles of working with your most critical suppliers collaboratively to overcome challenges and adopt a more transactional and inevitably adversarial approach, or alternatively redouble efforts, include more suppliers and speed up?

We’ll be able to answer this question when we have the results of our 2020 global supplier management research currently underway. In this year’s research report we’ll not only be exploring global supplier management practice but also the specific experiences and lessons learned from the current Covid-19 crisis and how to respond by implementing supplier management at speed.

Have you participated in this years 2020 supplier management survey?  
Survey: Supplier management at speed 
  Take part here

“Who’ll take the high road and who’ll take the low road?”

Level heads will be required to decide between the high road and the low road. The low road goes via short term cost reduction – we can anticipate that cost out teams are preparing to mobilise at this very moment – with its inevitable impact on relationships. Whereas the high road goes via continued faith and investment in building collaborative relationships to address both immediate and longer term challenges.

Our view is that organisations that exclusively select the low road are risking a retrograde step that stores up problems for the future. This is not time for a one size fits all strategy. We would suggest using an invaluable tool that you might have already deployed – segmentation. Look at what that tells you about your suppliers and develop appropriate strategies that preserve and build on relationships that you’ve already established and highlight others that might be more significant than you thought.

What we have learnt during this crisis is that working together bring results and that should be a valuable lesson for the recovery.

For further information on how we can help your organisation reinvent its supplier relationships for a new era, please contact us here or at enquiries@stateofflux.co.uk

*State of Flux research 

Take part in this years 2020 supplier management survey