Contract Packaging

Spring 2014

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14 • C O N T R A C T PA C K A G I N G • M A R C H | A P R I L 2 0 1 4 By Lisa M. Shambro We hear more and more about SRM as the years pass. At first, it was the acronym for Supplier Relationship Manage- ment. Increasingly, however, the acronym has come to mean "Strategic Relationship Management." SRM first emerged as an industry trend when customers began to focus more on the value their suppliers could bring to their organizations. Customers began to segment their supplier bases, most often based on the volume of spend and to some degree risk. ese programs were primarily designed to allocate greater resources to what were perceived as the most valuable (biggest) suppliers. is brought improve- ments in customer/supplier interactions, but it remained a relatively transactional concept. As the practice grew and matured, and more industry sectors were benefiting from SRM as a more strategic activity, we began to see two trends among leaders in our in- dustry. e first trend is increased curiosity about SRM to understand what it is, what leading practices are, and what benefits leaders find in the practice. e second trend is to benchmark current practices against leaders and take measurable steps to improve. At F4SS, we have been fortunate to work with Alan Day and his team at London- based procurement and supply chain con- sultancy State of Flux, which has brought insights to few others have, namely, the ability to quantify tangible benefits of SRM. In its fifth year of annual research, the firm, in its 2013 global SRM report — Six Pillars for Success, surveyed 425 global organiza- tions. Among the findings, the firm identi- fied that SRM leaders enjoy post-contract financial benefits in excess of 6% as well as significant "customer of choice" benefits: • Suppliers are twice as likely to invest Strategic Relationship Management: Is there really value here? | e Cost Cutter | The Six Pillars of SRM Value 1 BUSINESS DRIVERS & VALUE 2 STAKEHOLDER ENGAGEMENT & SUPPORT 3 GOVERNANCE & PROCESS 4 PEOPLE & SKILLS 5 INFORMATION & TECHNOLOGY 6 RELATIONSHIP DEVELOPMENT & CULTURE SRM value proposition clearly aligned to business drivers. Value captured and measured. Effective and proactive stakeholder engagement across executives, the business, and suppliers. Creating an effective operating model, and governance and process methodologies and tools. Understanding of the required skills and capabilities, organization structures, job proles and training solutions. Optimized use of technology to enable connection, collaboration and value creation across the business and with suppliers. Measures to develop supplier relationships to be more collaborative, innovative and mutually benecial. SRM Maturity Benchmarking Results 6.0 4.5 3.0 1.5 0 Business drivers & value Stakeholder engagement & support Governance & process People & skills Information & technology Relationship development & culture FMCG/CPG Leaders Followers F4SS members Advanced Established Developing Undeveloped continued on page 16 FIG.1: In studying SRM, State of Flux has defined six areas, or pillars, that drive value. FIG.2: Consumer goods (FMCG/CPG) and similarly, F4SS members fared well relative to Leaders in 'Relationship development & cul- ture,' but must work to improve in the area of 'Information & technology.' 05 CostCutter_0414.indd 14 3/18/14 1:44 PM

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