Companies See That Better Management of Their Suppliers Benefits the Bottom Line, Study Finds

By: State of Flux
November 07, 2014

Forty-six percent of leading companies report achieving more than four percent post-contract financial benefits from better supplier relationship management, according to research conducted by State of Flux. The research is in its sixth year and includes responses from more than 500 global companies across more than 20 industry sectors.

However, these financial benefits are not automatically achieved by all companies that have an SRM programme in place. Significant benefits are being achieved by companies that State of Flux classes as SRM leaders. The gap between leaders and followers has actually widened over the six years this research has been carried out.

The report, entitled Journey to Customer of Choice, also deals with how luxury brands manage their strategic suppliers, exploring whether they put as much effort into the supplier experience as they do their customer experience.  

Alan Day, Chairman and founder of State of Flux says, “In addition to examining the broad range of feedback on SRM, we chose to focus on the journey to customer of choice. This is in recognition of the need for companies to develop a better understanding and awareness of the importance of being a good customer.  We first highlighted this changing market dynamic that was the emergence of customer of choice in 2010, ever since we have worked to define and map the path to achieving it.”

Other key findings include:  

• SRM is increasingly focused on developing collaborative relationships to deliver more value.

• Leaders are making more financial gains with 46 percent reporting 4 percent-plus post-contract financial benefits.

• Leaders are almost twice as likely to receive customer of choice benefits.

• 88 percent still believe cost reduction is the most important business driver.

• Risk is a key business driver, particularly for financial services. However, it has dropped from the number one priority overall.

• Innovation is a key topic for 68 percent of respondents overall and 81 percent of leaders, however, it’s still a challenge to harness it.

• Leaders have done more to align their SRM programme to business objectives and 64 percent have documented a clear value proposition.

• The biggest barriers and challenges are still finding the right people with the requisite skills for SRM, and under-investment in training and enabling technology (only 8 percent of respondents make use of technology).