The focus must be on the 10% of suppliers representing 90% of the spend, risk and value. It is this small contingent of suppliers that are critical to the continuity and success of your business. Failure to properly manage these key suppliers results in lost savings, lost growth opportunities and exposes your organization to significant risk and business disruption through supplier failure. In fact, many companies tie up valuable resources focusing completely on the wrong group of suppliers – the many hundreds or thousands of suppliers that are of little consequence to the company.
Most organizations either don’t have SRM systems in place or are underachieving in terms of value. Our experience points to underinvestment in SRM with inadequate governance structures, skills and systems.
Approach and Experience
At Procure.ps, our professional and experienced team have worked with numerous organizations starting on the path to SRM and also been engaged to assist organizations to intervene with key suppliers and get them back on the right performance path.
We regard SRM as an absolute imperative to protect and sustain your business, drive innovation and competitive advantage, and deliver real value. Our views are supported by a benchmark study covering 800 companies across many sectors, representing $5 trillion in spend or 6.8% of world GDP. Only 10% of companies reached SRM maturity and only 44% of value was realized.
Those that are more advanced in SRM are achieving higher returns. Investment in SRM is crucial – in particular SRM governance, capability and systems.
The leaders recognize the importance of SRM. The survey highlighted that 70% of respondents said SRM is very important for the foreseeable future with the primary objectives of collaborative cost savings and reduction in supply chain risk.