B                                         Supplier Management –                                          Moving Beyond the...
AgendaIntroductionPanel Discussion     The Hackett Group – Pierre Mitchell     Reed-Elsevier – Mike Uddin     Sallie Mae –...
Strategic Sourcing Is Foundational, but SupplierManagement (SRM) Is Transformational...      Source: Procurement Key Issue...
Defining Supplier Management orAlternately Called “SRM”…                                                                  ...
“SMARTER SUPPLIER MANAGEMENT”    MOVING BEYOND THE STICK TO BECOME A CUSTOMER OF CHOICEPierre Mitchell, Director, Procurem...
Supplier RelationshipManagement                                                        Session Topics Increasingly used t...
What is Supplier RelationshipManagement (SRM)?           “Key processes, definitions, tools, and roles to drive   coordina...
Why SRM?•   Value beyond Sourcing Savings                                                       World-Class procurement gr...
SRM Leadership Is a Demonstrationof Industry Leadership9   © 2012 Ariba, Inc. All rights reserved.   Source: Planning Pers...
Hackett SRM Study    Objectives•        Rank the top SRM program value objectives being sought•        Assess SRM Performa...
What is your focus for SRM? How does this vary internally?                     What dimensions of SRM performance for key ...
Supplier RelationshipManagement “A comprehensive methodology was developed in house to improve supplier operational perfor...
How to Define an “SRM TopPerformer” (Sample Metrics)     •       Percent spend and suppliers in SRM programs and processes...
Internally, SRM Management Influence Varies bySpend Category and Related Functional Partners % of organizations managing t...
Top Performers Deliver Nearly 2x SRM Savings   Today than Peers, and SRM Value Will Take   Increasingly More “Value Share”...
SRM Has a Huge “ROI” (18-51X) Based on SpendSavings from SRM Process Investment! SRM “TopPerformers” Realize 2-5X Greater ...
Supplier RelationshipManagement  “Supplier Readiness to receive support on   processes and to share data is not always   ...
Top Performers Have 3X Higher Capabilities than Peers, butStill Have Room to Improve Beyond. Technology Lags…             ...
Top Performers Are Better                                                                                                 ...
Top Performers Have a Broader                                                                                             ...
OrganizationDedicated SRM Resources Outperform PartTimers. Top Performers Have Higher Skillsthan Their Peers.             ...
Multiple Segmentation Criteria Are                                                                                        ...
TechnologySRM Technology/Tools Practices - Extent„To what extent have you implemented the following practices?‟           ...
Supplier RelationshipManagement “SRM programs where there has been endorsement from senior management has been a key posit...
Barriers and Countermeasures       Cited Barriers                                            Tactics used to Justify SRM V...
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
Smarter Supplier Management  - Moving Beyond the Stick to Become a Customer of Choice
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Smarter Supplier Management - Moving Beyond the Stick to Become a Customer of Choice

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  • Speaking Notes: If procurement is about maximizing the value of supply, then strategic sourcing, as typically applied, addresses only a single element: pricing and TCO. Sourcing can only do so much to tap the true value of strategic relationships, drive innovation and improve supplier capabilities and performance over time. It is true that a strong sourcing process, embedded within a robust category management methodology, should set up the appropriate supplier relationship management (SRM) processes for success, especially surrounding strategic supplier relationships. But once preferred suppliers in a rationalized supply base are put in place, the game shifts toward joint value creation. This demands a collaborative approach that may prove difficult for many procurement organizations, as it requires new skills, processes, tools and organizational support.
  • How superior skills and more effective talent management drive better performanceTop performers generate significantly better functional performance through more highly skilled, effective and engaged talentTop performers have a greater proportion of jobs requiring sophisticated skillsDespite having more difficulty hiring and retaining talent, they use more effective talent management practices to hire, manage and retain higher caliber peopleThe people filling these jobs apply their skills with better performance results
  • Mention Fig 4 in text
  • *Assumes same overall Supply-Side value delivery and applies anticipated mix shift from studyBig changes planned. Shift from sourcing to SRM. TPs will hit inflection point
  • Smarter Supplier Management - Moving Beyond the Stick to Become a Customer of Choice

    1. 1. B Supplier Management – Moving Beyond the Stick to Become a Customer of Choice Sundar Kamakshisundaram – Ariba Pierre Mitchell – The Hackett Group Mike Uddin – Reed-Elsevier Jeremy Donaldson – Sallie Mae© 2012 Ariba, Inc. All rights reserved.
    2. 2. AgendaIntroductionPanel Discussion The Hackett Group – Pierre Mitchell Reed-Elsevier – Mike Uddin Sallie Mae – Jeremy DonaldsonQ&A2 © 2012 Ariba, Inc. All rights reserved.
    3. 3. Strategic Sourcing Is Foundational, but SupplierManagement (SRM) Is Transformational... Source: Procurement Key Issues Study, The Hackett Group, 20113 © 2012 Ariba, Inc. All rights reserved.
    4. 4. Defining Supplier Management orAlternately Called “SRM”… “Supplier Management” is multi- faceted and touches many aspects of Business Commerce Registration & On-boarding Supplier Process Portals • Supplier Information Management that unifies platform, process and supplier profiles across the Supplier company and keeps it current, complete and correct. Discovery • Highly usable web-based portal for suppliers to register Supplier Performance and manage information collaboratively with customers Management Management • Supplier Performance Management capabilities or SRM including Process Workflow and approvals, SurveysVendor Master and scorecards, flexible role based dashboards and Management Diversity/Green/ Corporate customizable reports Risk Responsibility • A Robust technology platform that seamlessly Management integrates in-context Supplier info such as Parentage, Financials, Diversity and Sustainability to manage and mitigate Supply Risk • A unified Supplier Record merging data and process flows to third party systems and data sources4 © 2012 Ariba, Inc. All rights reserved.
    5. 5. “SMARTER SUPPLIER MANAGEMENT” MOVING BEYOND THE STICK TO BECOME A CUSTOMER OF CHOICEPierre Mitchell, Director, Procurement Research, The Hackett Group5 © 2012 Ariba, Inc. All rights reserved.
    6. 6. Supplier RelationshipManagement Session Topics Increasingly used to deliver total cost savings Enabler for Innovation and Revenue / Growth Enablement  SRM strategy and value proposition  SRM performance and building the case Motivates suppliers beyond the checkbook  SRM Capabilities and Practices  Aligning SRM with category Challenge to implement because of management, supplier compliance, etc. existing operating models and skills  SRM transformation lessons learned NOT a software solution or “CRM’s  SRM technology enablement evil twin” Transact / Manage & Design Source Fulfill Develop
    7. 7. What is Supplier RelationshipManagement (SRM)? “Key processes, definitions, tools, and roles to drive coordinated proactive management of suppliers across the business” Supplier Performance Supplier DevelopmentSupplier Stratification SRM Governance Management and CollaborationHow should supplier How should supplier-facing How should supplier How should capabilities ofrelationships be stratified staff be organized and performance be managed existing suppliers bebased on strategic internal collaboration and across different supplier developed to deliverimportance to prioritize supplier interactions be types and strata to continuous improvementresources and tailor conducted? maximize performance? and ongoing costmanagement processes? reduction?• Supplier Stratification • Team Structure and • Function KPI • Supplier Development Definition Roles Development Needs Definition• Supplier Stratification • Ongoing Governance • Supplier Performance • Supplier Development Criteria • SRM Competency Target, KPI and Program Definition• Supplier Stratification Management Scorecard Definition • Ongoing Supplier Process • Ongoing Supplier Development Measurement. Includes Cost, Quality, Risk, etc. Executive Supplier Scorecard Supplier Name Executive Strategic Company- Management Executive Management Team Roles Executive Sponsor Executive Sponsor Executive Executive Sponsor Executive Sponsor Executive SRM Lead: Account Manager: Functional Area / Category: Site: Intellectual capital Company Supplier Supplier Contact: Scorecard Date: Wide Partners Management Team Roles Sponsor Sponsor Status Definition Supplier Representatives: Strategic Team Roles Good Meets or exceeds performance target Enterprise Partners Relationship Relationship Relationship Management Lead Relationship Relationship Management Lead Relationship Fair Poor Does not meet performance target; acceptable variance; improvement needed Unacceptable variance from performance targets; action required Company Representatives: Joint sharing Joint 80% Leads Roles Management Lead Relationship Management Lead Relationship Invalid Invalid percentage data has been entered into the cell Relationship Financial Value Strategic Leads Roles Leads Roles Company Management Lead Supplier Management Lead KPIs Metrics Performance Targets Performance Trend Supplier Score (Scale of 1-10) Comments capability process Business Office Roles Operations Management Team Roles Metric Metric Data Score Unaccept- Last Last Last One Qtr Metric KPI investment improvement Accept- KPI Target Multi- Multi- KPI Wt. Metric Today Strategic Suppliers Wt. Total Source Range able Range able Range Yr Qtr Mo Trend Score Score Suppliers Business Office Roles Operations Management Team Roles of Supply - Assurance ≤ ≥ h Business Office Roles Operations Management Team Roles Delivery On time delivery percentage 50% tbd 0 - 100 80 81 - 89 90 90 80 85 90 9.0 Contract Communications Operations Initiative Risk 15% Management Contract Management Management Communications Management Management Operations Management Management Initiative Management Management Risk Management Delivery conformance Additional available capacity 50% 56% 100% tbd tbd 0 - 100 0 - 100 ≤ ≤ 80 80 81 - 89 80 - 89 ≥ ≥ 90 90 80 50 78 75 85 80 95 90 h h 9.5 9.0 9.3 supplier Environment / Assurance of Communications Contract Operations Initiative Risk Capability Systems & Business collaboration Supply - Company Company Management Company Management Company Management Company Management Management 15% ≤ ≥ i Core Core Suppliers Supplier Supplier Supplier Supplier Supplier Financial stress Credit score 33% 11% 100% tbd tbd 0 - 60 0 - 20 ≤ 48 16 49 - 53 17 ≥ 54 18 40 15 54 16 58 17 50 18 h 8.3 9.0 8.8 Suppliers Financial Legal & Audit Customer Rejection rate Weighted non-comformance rate 26% tbd 0 - 100 ≤ ≤ 80 81 - 89 ≥ ≥ 90 70 75 80 90 h h 9.0 acquisition process Escalation Performance 26% tbd 0 - 100 80 81 - 89 90 80 83 85 91 9.1 Performance Financial Satisfaction Customer Management Management / CAR by supplier Value integration Quality Management Support Audit Legal & Management Escalation Performance 25% Process chage 16% tbd 0 - 60 ≤ 48 49 - 53 ≥ 54 40 45 50 60 h 10.0 Performance Financial Support Satisfaction Customer Management Management 20% Management Company Company & Audit Legal Management Company Satisfaction Escalation Company Performance Company Audit rating 16% tbd 0 - 60 ≤ 48 49 - 53 ≥ 54 30 35 40 42 h 7.0 Basic Performance Support Management Management Financial Value Basic Suppliers Transactional Suppliers Suppliers Management Supplier Supplier Management Supplier Supplier Supplier Supplier 1 Auidt response time Response to standard request 16% 9% 100% tbd tbd 0 - 60 0 - 100 ≤ ≤ 48 80 49 - 53 81 - 89 ≥ ≥ 54 90 40 60 43 70 45 80 56 91 h h 9.3 9.1 8.9 creation Supplier 2 Supplier 3 Response to emergency request Communication about potential problems 9% 9% tbd tbd 0 - 100 0 - 100 ≤ ≤ 80 80 81 - 89 81 - 89 ≥ ≥ 90 90 90 70 80 75 70 76 60 78 i h 6.0 7.8 opportunity Flexibility to change 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 80 85 85 91 h 9.1 Roles Company Team Member Supplier Team Member ≤ ≥ h Non-Preferred Customer services 9% tbd 0 - 100 80 81 - 89 90 70 75 80 85 8.5 Services 15% Efficiency in providing information 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 90 80 70 60 i 6.0 Local support efficiency 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 85 91 h 9.1 Production lead-times 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 90 80 70 60 i 6.0 Competitiveness of Production 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 85 90 h 9.0 lead-times Stability of lead-times 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 80 80 g 8.0 Compliance with quoted lead- 9% 100% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 85 90 h 9.0 8.0 times
    8. 8. Why SRM?• Value beyond Sourcing Savings World-Class procurement groups create: TCO reduction and „disciplined growth‟ – 3.6x greater savings from SRM than peers in Non-cost performance improvement direct spend• The Growth Agenda – 13.1x greater savings from SRM than peers in indirect! More innovation Source: 2011 Hackett Procurement Benchmark Emerging markets Incremental revenue from “Agility” (variabilization, flexibility) supplier innovation efforts• Supply Risk facilitated by Procurement 8.3% Viability/capacity Compliance (quality, regulatory, etc.) 3.5%• Third-party governance• Supply Chain vs. Supply Chain Multi-tier management• Peer Group Top Quartile Efficiency/automation of SRM Source: 2011 Hackett Procurement Benchmark8 © 2012 Ariba, Inc. All rights reserved.
    9. 9. SRM Leadership Is a Demonstrationof Industry Leadership9 © 2012 Ariba, Inc. All rights reserved. Source: Planning Perspectives, Inc.
    10. 10. Hackett SRM Study Objectives• Rank the top SRM program value objectives being sought• Assess SRM Performance in growth enablement, total cost reduction, and other value streams, by supplier segment, and by spend category• Define and correlate SRM capabilities and practices to performance to show which ones really matter Org structure and responsibility models (including by stakeholder type) Supplier Segmentation approaches and analysis of performance/capabilities for „strategic supplier‟ management Level of alignment to other areas in Procurement and the business Technology adoption and success (e.g., automation to free up time for strategic SRM)• Assess SRM KPIs and how projects are getting funded• Create an “SRM ROI” figure using different assumptions for “R” and “I”• Learn how others are knocking down SRM adoption barriers and other lessons learned 10 © 2012 Ariba, Inc. All rights reserved.
    11. 11. What is your focus for SRM? How does this vary internally? What dimensions of SRM performance for key suppliers would you like to improve? (% of responses – multiple responses allowed) 60% Innovation 85% 40% Supply Assurance and Risk Mitigation 67% 60% Flexibility 35% “Agility” as antidoteGrowth to Risk 60% Quality 62% Compliance focused 60% Cost /price reduction 50% 50% Reliability 46% “The biggest challenge is to get New business generation / revenue uplift 30% category management teams (non-innovation related) 50% to contribute. The reluctance is in part due to the intense work 30% load on procurement on day Regulatory compliance 35% to day issues in achieving cost reduction.” Top Performer Peer Study Respondent 11 © 2012 Ariba, Inc. All rights reserved.
    12. 12. Supplier RelationshipManagement “A comprehensive methodology was developed in house to improve supplier operational performance on a broad basis. The related initiative has brought big benefits across the entire supplier base, with focus on the largest and most critical partners.” SRM Performance
    13. 13. How to Define an “SRM TopPerformer” (Sample Metrics) • Percent spend and suppliers in SRM programs and processes (overall and for strategic/critical suppliers) • SRM FTEs (not just in Procurement) per $B in “SRM-influenced” spend For overall vs. strategic suppliers (less vs. more FTEs for TPs respectively) Similar to sourcing: “Center-Led”; Quantity vs. Quality of Influence • Stakeholder involvement AND satisfaction with SRM • Economic value contribution as % of spend from SRM Savings Related (i.e., price; TCO elements) Non-Savings Related (e.g., revenue uplift, working capital, etc.) • "Customer of Choice" status to key suppliers How do your suppliers segment you? How much attention/budget/IP do you enjoy vs. competitors? What do you bring to the table besides a checkbook (good and bad)? Have you asked your suppliers? If so, what have you done with feedback? How do you measure SRM performance? Top performers feel that almost 60% of SRM value created is measured (as compared to roughly 20% for other firms)13 © 2012 Ariba, Inc. All rights reserved.
    14. 14. Internally, SRM Management Influence Varies bySpend Category and Related Functional Partners % of organizations managing these spend categories well in an SRM program/process IT (services / large BPO relationships) 76% IT infrastructure and Enterprise Applications… 74% Direct Materials / Services 62% HR (services / large BPO relationships) 48% Other indirect services 48% Finance (services / large BPO relationships) 38% MRO / Capital Equipment services 37% Transportation & Logistics (services / large BPO… 33% Facilities Management / "Workplace Services" 30% not managed formally managed tactically at best managed well at a few key suppliers managed well across all relevant spend Best-in-Class management Not Applicable Do Not Know Set up a governance structure, and adopt a “best practices benchmarking” approach
    15. 15. Top Performers Deliver Nearly 2x SRM Savings Today than Peers, and SRM Value Will Take Increasingly More “Value Share” from Sourcing Total monetary value delivered from SRM (and non-SRM growth benefits) processes as a percentage of total spend 0.70% 5-24X “ROI” for SRM for most firms! 0.57% 1.16% 0.13% 0.95% Growth-Related benefits (Non-SRM) 1.14% Growth-Related Benefits (SRM) Cost Savings/Avoidance from SRM 0.06% 0.53% 2.90% 2.48% 1.93% 1.20% Top performers will have Peer Group Top Performer Peer Group Top Performer higher value contribution from SRM than Sourcing in 3 years Currently Three YearsSourcing 5.00% 4.13% 3.60% 3.37%Savings:
    16. 16. SRM Has a Huge “ROI” (18-51X) Based on SpendSavings from SRM Process Investment! SRM “TopPerformers” Realize 2-5X Greater than Their Peers! SRM Top Metric Peer Group Performer Source 1 Total SRM FTEs per $B Spend 5.16 3.50 2011 Hackett SRM Study $ $ 2 SRM fully-loaded wage rate $ 98,389 106,153 Hackett 2011 Procurement Benchmark $ $ 3 SRM Process cost per $B spend 507,688 371,535 Line 1 * Line 2 Normalized to spend and burdened 4 Process cost as a % of spend 0.07% 0.05% (technology and other costs) SRM-related spend savings (reduction/avoidance) as a % of 5 spend 1.20% 2.48% 2011 SRM Study 6 SRM "ROI" 1818% 5135% Line 4 divided by Line 5 The study also looked at involvement vs. satisfaction across nine different roles. Top performers outscored peers across the board.
    17. 17. Supplier RelationshipManagement  “Supplier Readiness to receive support on processes and to share data is not always a given.”  “Agreeing leads and roles and responsibilities is difficult due to the multiple parties involved having a different opinion.”  “Buy-in from suppliers and business areas who own key relationships is key to ensure an effective program.” SRM Capabilities  “SRM is seen as a useful by some and burdensome by others and meetings for meeting’s sake. “
    18. 18. Top Performers Have 3X Higher Capabilities than Peers, butStill Have Room to Improve Beyond. Technology Lags… 2.91 Organizational Top SRM performers: 0.98 • Have 2.3X fewer strategic suppliers (per $B spend) than peers, enabling them to perform SRM with 37.5% 2.53 Strategy & fewer resources Alignment 1.00 • Dedicate over 2.7X more resources to each strategic supplier 2.62 • Are more than twice as likely to lead Process SRM via a single enterprise SRM group Technology is 0.87 immature and and program/process sporadically • Have effective SRM skills at more than implemented 2.25 2X the rate of peers Technology • Developed best-practice capabilities at 0.52 Top Performer Peer 3X the rate of peer organizations 0=Not Applied • Adopt technology much more 1=Applied somewhat in a few areas aggressively than peers in self-service, 2=Applied very well in a few areas 3=Applied somewhat across most areas analytics, etc. 4=Applied well across most/all areas 5=Going even beyond this practice N/A - Not Applicable18 © 2012 Ariba, Inc. All rights reserved.
    19. 19. Top Performers Are Better Strategy/AlignmentCustomers to Their Key Suppliers Relative to your competitors, to what extent do you feel that you are a "customer of choice" for suppliers in critical spend categories? 50% 46% 38% 30% Peer Group 20% Top Performer 12% 4% 0% 1=We are definitely NOT a 2=Were a good customer 3=Were a good customer 4=Were a very good customer of choice in a few areas overall, but still have a customer, especially with few opportunities critical suppliers19 © 2012 Ariba, Inc. All rights reserved.
    20. 20. Top Performers Have a Broader Strategy/AlignmentMeasurement System for SRMHow comprehensive are the supplier performance metrics that you employ?(% of responses – single choice) 41% 40% 40% 37% 20% 11% 11% 0% N/A - we dont measure suppliers 1=Narrow: biased towards the 2= Broader, but biased to what is 3=holistic: focused on executing and formally contract easily reported or required for expanding strategic business risk/compliance requirements outcomes and capabilities) Peer Top Performer20 © 2012 Ariba, Inc. All rights reserved.
    21. 21. OrganizationDedicated SRM Resources Outperform PartTimers. Top Performers Have Higher Skillsthan Their Peers. How effective are your SRM resources in terms of SRM-related skills? Dedicated SRM Resources Resources doing SRM part-time 90% 40% 60% 48% 10% 12% 35% 4% 50% 50% 36% 31% Peer Top Performer Peer Top Performer Somewhat effective skills Highly effective skills Somewhat effective skills Highly effective skills
    22. 22. Multiple Segmentation Criteria Are Process Used – Not Just „Impact vs. Complexity‟ Please select the segmentation criteria that you formally use in your supplier segmentation/tiering criteria? (% of respondents – multiple selection allowed) Relationship complexity / Integration 89% 52%Risk Factors (e.g., sole/single sourced, tied to critical 89% products/services, etc.) 76% Spend magnitude 89% 95% Buyer-Supplier dependency 67% 52%Value opportunity identified/suspected; willingness to 67% partner 52% Revenue factors (suppliers tied to major new 67% product/service development) 33% Supplier Performance 44% 38% Barriers: • "Establishing a consistent standard to Other 22% determine which suppliers should be 10% included in a program“ • "Lack of segmentation to identify suppliers that would be a good fit” Top Performer Peer 22 © 2012 Ariba, Inc. All rights reserved.
    23. 23. TechnologySRM Technology/Tools Practices - Extent„To what extent have you implemented the following practices?‟ Peer Avg. TP Avg. 2.63 A supplier portal allows supplier self-service information maintenance and access to various SRM-related applications 0.48 Third-party content/knowledge is integrated into SRM-related 2.63 applications to allow external supplier intelligence rather than just internally provided intelligence 0.33 Analytics are available for supply base segmentation, aggregated 2.56 supplier/category performance, risk management status, and other SRM-related supply base analytics 1.29 Collaborative workspaces and applications are available to support 2.20 project planning/tracking, training / knowledge management, document sharing, linkages to specialty applications, etc. 0.33 0=Not Applied 1=Applied somewhat in a few areas 2=Applied very well in a few areas Core SRM workflows are automated for supplier 1.33 3=Applied somewhat across most areas qualification, supplier performance target setting, performance data 4=Applied well across most/all areas collection/scoring/sharing, compliance monitoring, etc. 0.46 5=Going even beyond this practice N/A - Not Applicable Top Performer Peer23 © 2012 Ariba, Inc. All rights reserved.
    24. 24. Supplier RelationshipManagement “SRM programs where there has been endorsement from senior management has been a key positive driver in getting support. The creation of a forum and regular dialogue to bring open and honest debate has been the catalyst to change some of the ways in Making it Happen which internal functions work with suppliers.”
    25. 25. Barriers and Countermeasures Cited Barriers Tactics used to Justify SRM Value• "Resources", "Manpower No hard benefits needed - treated as 63% strategic initiative justification", "Lack of Time", 33% "resources to manage [program]" Integrate SRM as just another part of 38%• Buyers are not always able to Procurement Category Management methodology 53% implement - no SRM Tool available Perform detailed analysis (e.g., calculate 38%• Not enough FTEs to focus on SRM, costs of ineffective supplier management and potential benefits of improved… 13% "ROI and resources to focus on it" Use risk management or other corporate• Procurement project management initiatives to fund/support the SRM effort 38% (e.g., external customer… 47% resources - Funding for systems/tools to support Use Pilot programs for quick wins and then 38% use calculated benefits for broader ROI• Commitment of resources from a model 33% personnel and time commitment Use external benchmarks and peer case 25% standpoint and tools studies to show what others are doing 60% Tap Free Resources at suppliers who are 13% willing to suggest and implement improvement ideas 7% Top Performer Peer 25 © 2012 Ariba, Inc. All rights reserved.

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