Accenture survey on supplier relationship management

A recent Accenture survey on supplier relationship management contains some interesting nuggets of information.

“Researchers sought the views of some 229 senior global procurement executives in 14 countries through both Web-based and paper-based questionnaires. …

The “survey noted that companies have an opportunity to achieve an additional 2 percent savings by increasing their focus on supplier relationship management. Supplier relationship management leaders achieved savings of 3 percent on their total annual procurement spend from supplier relationship management activities whereas all respondents achieved 1 percent. This translates to average benefits of €67 million (US$79 million) and €18 million (US$22 million) respectively for supplier relationship management leaders and all respondents, offering a tangible prize for those that focus on supplier relationship management…

“So what about the skills required to deliver supplier relationship management? According to our respondents the most important skill is the ability to work crossfunctionally. Could this be a potential “wake up call” for chief procurement officers? Since supplier relationship management leaders, successfully gaining from their supplier relationship management activities, indicate that they bring together people inside and outside procurement to work on supplier relationship management, should more organizations be encouraged to follow
suit? If procurement organizations were to take a broader role in supplier relationship management and break out from the purely administrative contract activity, then what greater value might be achieved? …

“Other skills that respondents valued as important were considered to be having a sound knowledge of cost drivers in the process, a creative mind to identify new opportunities to seek value and interpersonal skills to build long-term relationships. This requirement for crossfunctional skills is ratified by the focus companies are affording to joint product development activities, where procurement generally plays a role in supporting different areas in the business as they work with suppliers.

“Often, production or design departments work with suppliers and the procurement specialists are asked for support in identifying the best sourcing approach for a particular product and service or perhaps they are asked to advise on the supply market and support negotiations with suppliers.

“All respondents picked the following as most important:

1. Monitoring and reporting suppliers’ performance
2. Conducting joint process improvement projects with suppliers, i.e., logistics solutions, Just-in-time, quality assurance
3. Effective logging of contract information (although interestingly, this conflicts with where the procurement functions are focusing their resources)

In comparison, for the supplier relationship management leaders, the top three most important processes subtly adjust to:

1. Effective logging of contract information
2. Monitoring and reporting suppliers’ performance
3. Conducting joint process improvement projects with suppliers

Industry Leader Breakdown

“Accenture has been working with senior supply chain executives for more than 20 years. Supported by the results of this survey, we believe that organizations can achieve world-class supplier relationship management by:
• Segmenting their supplier base
• Developing specific strategies for each supplier segment
• Creating comprehensive plans and performance monitoring processes to drive and track performance for each segment aligned with sourcing goals
• Developing robust supplier relationship management processes to consistently deliver quality outputs
• Developing the organization to include supplier relationship management roles performed by skilled professionals
• Using technology appropriately to enable supplier relationship management processes and performance management
• Constantly monitoring, assessing and setting priorities.

“The path of partnership is never an easy one. Leaders that have embraced supplier relationship management from a more strategic and holistic standpoint, however, are clearly winning in the marketplace— and not purely through cost reductions. Companies can realize other benefits beyond savings, including reduced risk, increased speed-to-market, and access to new technology and solutions. Supplier relationship management, although not a panacea, can help companies differentiate themselves in an increasingly competitive landscape. Successfully harnessed, supplier relationship management can channel innovation into an organization and help businesses move one step closer toward achieving high performance.