In a new posting today Supply & Demand Chain Executive reports the results of a recent survey of 223 procurement, supply chain and supplier relationship management executives across 15 industries and nine countries to understand how different organizations approach Supplier Relationship Management (SRM), and specifically the business case for change.

The key findings, included these:

* Almost two-thirds (62 percent) admitted that they did not have an accepted definition of SRM in their company

* When asked about the topics most commonly discussed at review meetings with key suppliers, performance and service issues topped the list, followed by cost reduction opportunities

* Business strategy and plans, new supplier products/services and value delivered came lower down the list, while customer performance — how easy the buying organization was to deal with — came last

Survey sponsor Alan Day, managing director of U.K.-based State of Flux said "Many organizations have confused Supplier Performance Management (SPM) with Supplier Relationship Management (SRM)".

Day highlighted that: "SPM is about getting what you have been promised in a contract, whereas SRM is about collaboratively driving value as part of a two-way relationship."

The findings indicated some of the issues managing SRM programs, eg: 

* Nine out of 10 respondents to the survey said SRM would grow in importance, but a significant number of procurement functions were ill-equipped to manage it effectively

* Half admitted they were unable to measure the benefits, despite an intuitive belief that value was created through closer relations

* Fifty-seven per cent acknowledged that the time they spent on SRM was insufficient, 47 percent had not trained staff in relationship management skills

* 53 percent did not have designated teams or account managers in place to deal with key suppliers

However,  the survey also identified some encouraging news:

* the survey found that 28 percent of those organizations that were able to measure the value of SRM said it amounted to more than 3 percent of the total annual spend with key suppliers.

* As well as joint cost savings, the main benefits were reduced supply risks, greater supply chain efficiency and improved quality

* Almost half (47 percent) of respondents also reported that their SRM programs had sponsorship from C-level or other top executives, rather than senior or middle managers — a key ingredient in ensuring that such initiatives become part of the organizational culture and way of operating

Day concludes: "We found some impressive examples of successful supplier relationship management in action.

The fact that more organizations are recognizing the value that can be gained from SRM and embracing a different approach to working with key suppliers is encouraging. The challenge now is to turn these pockets of excellence into practices that are replicated more widely."

Source: Supply & Demand Chain Executive, 24 June