Supplier Relationship Management (SRM) Research 2012-2013


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Over the last twelve years that we have conducted the Supplier Relationship Management (SRM) Survey, the market for SRM has steadily grown and companies continue today to invest in these critical applications. The growth in this market is a testament to the importance of this survey.

In addition to an overview of the major players in the market, the vendor survey shares the experiences, issues and questions that we see daily as procurement professionals implementing and optimizing SRM. Within the document, our expert colleagues share their views and experiences on SRM, resulting in cutting-edge opinion that offers a unique perspective on different facets of SRM. Major themes include the Seven Strategies for Future Procurement, Procurement and Sustainability, Usability and Demand Management, Supply Chain Finance and Procurement and Innovation.

Furthermore, the reader can find vendor profiles describing the participating vendors in greater detail. The descriptions cover information related to their specialization, the total scope of their offering, their distinguishing characteristics compared to competitors, the types of solutions offered (SaaS/In-house etc.), implementations and markets targeted.

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Supplier Relationship Management (SRM) Research 2012-2013

  1. 1. Supplier Relationship Management(SRM) Research 2012-2013Solution Analysis and Business Insights
  2. 2. Supplier Relationship Management (SRM) Research 2012-2013 SRM Prepared and edited by: Sarissa Alleijn Fleur Baarspul Merel Plante Special thanks to: Thomas Dahm Marjolein Dijkshoorn Ton van Dolder Erick Haag Bart Hellings Kevin Lemmens Martin Putters Kirsten Schipper TorbjÖrn Thorsén A note of thanks…. Capgemini Consulting would like to extend its thanks to the vendors who made time to participate in the Supplier Relationship Management Survey. Without their cooperation and support, research of this nature would not have been possible.
  3. 3. Supplier Relationship Management (SRM) Research 2012-2013Table of Contents PagesForeword 4Business Insights 7Functionality Analysis 25Supplier Profiles 57
  4. 4. Supplier Relationship Management (SRM) Research 2012-2013ForewordDue to the challenging economic conditions of the last few years, many CPO’s have reverted to the old school methods ofprocurement: achieving savings through squeezing suppliers and contract renegotiations. We feel this trend is unfortunate as theeconomic situation currently creates numerous opportunities for procurement organisations to achieve savings while creating longterm, sustainable relationships with suppliers.How can procurement organisations respond to the need for short-term savings while simultaneously focusing on long-termsupplier development? We developed the “Seven Strategies for Future Procurement”, which is a practical framework to assistCPOs in creating best-in-class procurement organisations. Regardless of the maturity of the organisation, these strategies shouldbe included in the strategic plans for the coming years.Below is a high-level look at the “Seven Strategies for Future Procurement”:Closed Loop ProcurementMany procurement organisations are still struggling to master the basics: spend visibility and, sourcing and contract compliance.Establishing closed loop procurement is a major achievement and an end goal in itself for most procurement organisations.This strategy involves optimising the basic infrastructure for procurement, from source to pay, in processes, organisation andsupporting IT systems.Hybrid Organisation ModelsAt a functional level, we see a trend towards hybrid organisational models that combine the benefits of central coordinationwith improved business collaboration. At a category level, we see further differentiation in organisational models depending onbusiness, category and supply market specific characteristics. A one-size-fits-all organisation design is no longer good enough.Gain all of the benefits from different organisational models and shape your own future procurement organisation.Supplier Value ManagementLeading procurement organisations manage collaborative supplier relationships to extract more value from the supply base.Creating value is on every agenda, but capturing this value is difficult. Utilising a hybrid organisation model, you will be able tomanage different categories in a diverse manner. It is our belief that innovation is the driver for creating value. Use InnovationDriven Procurement (IDP) to accelerate the pace of innovation within organisations by leveraging the innovative power of thesupply base. (For IDP see Business Insights Chapter).Supplier Risk ManagementIncreased dependency on external suppliers, volatility in raw material and energy prices, shortage of key materials, currencyimbalances, and global financial crises have all made companies recognise once again the importance of supplier riskmanagement and overall resiliency in the supply chain. Looking at the outlook for 2012, we believe risk management willbecome even more important in the year ahead. Risk management will be central to procurement, combining risk, innovation,sustainability, preferred customer strategies, and supplier management.End-to-End Supply NetworksLeading procurement organisations manage multiple supply networks that differentiate service characteristics by product/marketsegment. Managing complex supply networks requires pipeline visibility and alignment of planning and control across multipletiers of suppliers.Talent DevelopmentFor years we have seen that CPOs around the globe indicate that talent is the fourth biggest challenge for “marketing”procurement within their own organisation. We strongly believe that talent will be the key driver of success for procurementorganisations in the years to come. Leading companies have recognised talent as the key enabler for further developing thesupply management function, and are investing heavily in attracting, training and retaining top talent.4
  5. 5. Supplier Relationship Management (SRM) Research 2012-2013Technology LeverageLeading supply management requires technology that is more user-friendly, provides real-time visibility, is better integrated,enables more effective collaboration with the supply base, and has more powerful analytic and simulation capabilities.This last “strategy” for future procurement, in particular, is a key enabler for realising most of the other strategies. This is whythe choices in technology should be an integral part of the procurement strategy. Our 2012 SRM survey will help to explore thetechnology development areas for your organisation.As part of the procurement transformation business, we see it as our mission to deliver high performance and robust results toour clients. The results not only impact procurement departments, but also stretch to other business areas. To deliver qualityresults and benefits, we continually develop our thought leadership in the business marketplace. We track recent developments inSupplier Relationship Management (SRM) solutions, conduct surveys, and evaluate our previous initiatives in order to build a richknowledge base of lessons learned from our client and supplier experiences.We are pleased to present to you the Supplier Relationship Management (SRM) survey 2012-2013. It is interesting to see that overthe last twelve years that we have been running this survey, the market for SRM is still growing and investing in these applications.This year’s Supplier Relationship Management study consists of three parts:1. SRM Research: Business Insights—our thought leadership from around the globe, related to the priorities of today’s ChiefProcurement Officers (CPOs) and the Seven Strategies for Future Procurement.2. SRM Research: Functionality Analysis—our view of the values you should expect from SRM applications.3. Supplier Profiles: Profiles of all SRM suppliers who participated in our research.The research and analysis is based on a series of questions designed to assess whether the software covers a specific set offunctions within the SRM environment. A new item in our research is our independent view on the different vendors. We havelearnt from previous client engagements that this is valuable information for package selection activities.Apart from the survey, which gives you an overview of the major players in the market, we also want to share the experiences,issues and questions that we encounter on a daily basis as procurement professionals implementing and optimising SRM; thesecan be found in the ‘business insight’ chapter of our publication. We therefore asked our foremost colleagues to share their viewsand experiences of SRM, resulting in four expert opinion stories, each telling something about SRM and procurement, fromdifferent perspectives.Our procurement experts have worked on this study with great care. We hope you enjoy reading it as much as we enjoyed writingit and look forward to your feedback. Let it be an inspiration for your future initiatives.We wish to thank all vendors and colleagues who have contributed to this year’s SRM study.Ton van DolderVice PresidentSupply Chain Management Practice Leader The NetherlandsCapgemini Consulting 5
  6. 6. Supplier Relationship Management (SRM) Research 2012-20136
  7. 7. Supplier Relationship Management (SRM) Research 2012-2013Business Insights 7
  8. 8. Supplier Relationship Management (SRM) Research 2012-2013The purchaser as garbage manHow the procurement function can contribute to a more sustainable worldAuthorsErick Haag & Bart Hellings8
  9. 9. Supplier Relationship Management (SRM) Research 2012-2013T he procurement function always Introduction influences multiple supplier Sustainability was once the domain relationships. Therefore, it can play of idealists, activists and important role in striving for a more Increasing scarcity of resources, risingsustainable world. This is especially energy costs and stricter policiesvalid in sectors where the purchase made sustainability a topic for thevolume accounts for more than 50% of world of business. Sustainabilitythe turnover. Over the past years, a lot targets are nowadays integrated intoof attention has been focused on this the strategies of major companies likesubject. Most of the time, the emphasis Unilever (100% sustainable purchasingis on influencing suppliers; this article of agricultural products), DSM (One ofstrives to make clear that this alone is the three strategic pillars for 2020), andnot enough. Influencing stakeholders Nike (considers a closed-loop supplyoutside the procurement function chain essential for future objectives).is essential to contributing towards From these examples it is clear thatachieving the sustainability goals of in realising the goals that are set,an organization. The focus is shifting optimising parts of supply chains is nottowards managing goods returns and enough. A radical change is needed,waste processing. Purchasers should demanding a new collaborative waybe garbage men, from the perspective of working amongst suppliers, clientsthat garbage is not waste but instead and other stakeholders throughoutshould be viewed as a valuable the supply chain, including the returnresource. stream. This new model is also known as ‘closed loop supply chain’, as illustrated in Figure 1.Figure 1: Extended focus area for the procurement function from a focuson the incoming materials to a ‘closed-loop supply chain’ approach. Traditional focus of procurement function Information Flow Internal Supply Chain Procurement Production Sales Flow of goods Supplier Market Consumers Recycling process New focus of procurement function 9
  10. 10. Supplier Relationship Management (SRM) Research 2012-2013 The changing role of the When this concept of reusing materials procurement function in a is applied on a large scale, this has a closed-loop supply chain major impact on the traditional role of procurement. The strategic value of the For the procurement function, goods return stream increases and the sustainability traditionally meant volume of newly purchased materials purchasing goods and services against will decrease. However, this model optimal environmental and social will have a major impact on existing conditions. However, to respond to supplier relationships. For example, the increasing challenges of resource when suppliers collaborate actively on scarcity and fossil fuel dependency, an optimising recycling opportunities, they increasing number of organizations are will be ‘rewarded’ with less orders for searching for possibilities to collaborate new materials. with partners in the supply chain and to ‘close the loop’ by using waste as In assessing the strategic value of raw material. The development of a supplier, a shift will occur from a this concept was heavily influenced strictly financial perspective on the by the Cradle to Cradle concept that strategic value to a ‘triple bottom line’ was introduced in 2002 by William perspective, based on the value for McDonough and Michael Braungart. people, the planet and profits. This The core of this concept is to reuse means that suppliers who are actively materials from used products, to involved in recycling and recycled produce new ones. Maintaining the materials supply will be able to maintain quality of materials is essential for or even increase their strategic value long-term success of this model. The for clients. Cradle to Cradle concept is already applied successfully by companies like Auping, Desso, Forbo Flooring and Van Gansewinkel.10
  11. 11. Supplier Relationship Management (SRM) Research 2012-2013Optimising a closed-loop supply Implementing the change Conclusionchain has more impacts on theprocurement function. For example, The impacts that were described The procurement function playsthe procurement function will play earlier provide a vision on what the an important role in reducing thean active role in selecting partners procurement function would look like ecological footprint of an the recycle chain, and in selecting after successful implementation of It is not sufficient to merely transferthe right suppliers based on their this type of sustainability policy. It is the demands from internal users tocontribution to a closed-loop supply unrealistic, and often undesirable, to suppliers. The procurement functionchain. Category teams will have to reach the final stage in a very short time should play an important role inmake different choices, based on ‘triple (within less than a year), as the required establishing a closed loop supplybottom line’ principles, including all change is too fundamental. Therefore, chain and in actively managing theelements of a closed-loop supply chain. an implementation plan should be suppliers involved. The increase ofFurthermore, new category teams carefully developed; such a plan could reused materials in the supply chainwill be established based on the new be made per category, for example, has an impact on the supplier strategycategories from the return stream of by starting with the highest ecological and portfolio. The fact that morematerials. Planning and managing the footprint. Alternatively, it could be organisations are struggling with theirflow and volume of materials becomes planned per end product, which is ecological footprint, is irreversible. If wemore complex because there are more complex, as an end product continue wasting our resources like wemore reused materials to be collected contains a variety of materials. Focus do now, we need to carefully considerand processed. New processes and and speed of the plan heavily depends our waste. Thus, in order to improvesystems need to be implemented to on the organisation’s goals. matters our purchasers should bemanage a closed-loop supply chain. garbage men, recycling that which is noExamples include getting products longer needed.back from users, maintaining quality ofthe return stream, handling informationon traceability of products and planningthe input of a combination of new andused materials.Figure 2: An example of an introduction plan Phase 3 The procurement function proactively contributes to innovation throughout the supply chain Sustainability aspects are part of integrating supply chains Suppliers are actively involved in Phase 2 integrating supply chains, for example through involvement in Design for The procurement function is involved in Recycling (DFR) realizing sustainability targets entailing a closed loop supply chain Procurement stimulates suppliers to contribute to the recyclability of their products Phase 1 Sustainability criteria are included in buying specifications Suppliers are partly selected on their contribution to reaching sustainability targets 11
  12. 12. Supplier Relationship Management (SRM) Research 2012-2013Where Usability and DemandManagement MeetAuthorTorbjörn Thorsén12
  13. 13. Supplier Relationship Management (SRM) Research 2012-2013A little over ten years ago, Booz, Allen and Hamilton published a short thought leadershippiece on Procurement Strategy CREAT VALUEin their Strategy and Businessmagazine entitled “The Four Phasesof Continuous Sourcing”1. Although TS SULthe article failed to make the impact RE MANAGE DEMAND Y OFit undoubtedly merited, it did provide ER LIVan alluringly simplistic framework for DEgauging procurement strategy that has INED STA REDUCE COSTsuccessfully stood the test of time. SUIn brief, the framework consists of fourvalue levels that procurement functionsneed to master and continuously revisit CAPTURE MARGINin order to stay on top of their game. Adapted from The Four Phases of Continuous Sourcing, Booz & Co. TIMEWhilst the majority of procurementfunctions operate quite satisfactorily —and in a large number of cases evendeliver remarkable returns—on the Second, globalisation—of bothlower levels of the framework (capturing supply markets and the workforcemargin and reducing cost), few are – has enabled organisations toable to master the skills necessary to reduce costs by switching supply todeliver against the upper reaches of low-cost locations.the framework (managing demand andbecoming real value creators). This is What signifies most initiatives on theseparticularly evident in the procurement levels is that they are mostly outbound,of indirect goods and services facing suppliers and partners ratherwhere even organisations that have initiating change inside the organisationmastered direct materials procurement itself. Understanding the implications offalter, thus leaving a great deal of this selected focus is a key challengepotential unrealised. for procurement organisations who aspire to elevate their position and riseOne reason that most organisations are above the better able to consistently addressthe lower two levels of the Boozframework (capture margin and reducecost) is that procurement technologyhas matured; e-procurement ande-sourcing are now standard toolsfor most organisations, as is the shifttowards a centre-led procurementmodel. The introduction of thesetechnologies and organisational modelshas enabled companies to effectivelyintroduce increased competition innegotiations in order to reduce supplierprices. They are able to leveragee-sourcing technologies to addressa wider potential supply base, whilstreducing the number of contracted andpreferred suppliers as a consequenceof the centralised procurement model. 13
  14. 14. Supplier Relationship Management (SRM) Research 2012-2013Managing demand KEY (SOUGHT-AFTER) ATTRIBUTE RANKING OF AIn essence, and this is particularly true MODERN PROCUREMENT PROFESSIONALwhen it comes to indirect materials andservices spend on, managing demandis made up of one part compliancemanagement and one part business 32% CATdevelopment. Demand Management EG EXPE ORYenables the full enterprise to leverage 27% PROC E RTISexisting contracts by rolling out UREEXPE MEN RIEN Tcategory-wide e-procurement support, CE EXEC UTIV INFwhilst keeping an ear on the ground E CO LUENCE MMU A NICA NDand providing enough flexibility toensure that new needs are supported CHAN GE M ANAG 63% TION CAPA EMENT(in a controlled manner) in order to BILIT IES43%maintain momentum.The procurement function needsto not only be able to track spendcompliance (to policy, processesand contracts) and provide intuitiveself-service procurement channels Extending the scope of usage patterns, a high volume of spend needs to be transacted using(where applicable), it also needs to procurement e-procurement.have the competence and capacity to From a strategic perspective, extendingunderstand and communicate benefits the scope of procurement to include For the past decade, rolling out self-of procurement in a business context. the upper levels of the Booz framework service procurement has been one of requires the following prerequisites: the key priorities for many procurementUnfortunately, this is quite a step ensure that as high a share of spend as functions. Yet very few organisationsout of the comfort zone for many possible, is under management, that have been able to achieve the levels ofprocurement professionals who have e-sourcing is widely adopted and used usage that justify the costs of doing so.often built their careers and reputations across all categories, that contracts are In retrospect, ROI for e-procurementon hardline negotiation and policing managed accordingly with supporting has not been a boardroom successtactics. technology in place to ensure visibility, story. While online commerce andThe ability to allocate focus accordingly and finally that supplier risk and social networks have taken the worldis what truly sets leading and mature performance is tracked and appropriate by storm, e-procurement is stillprocurement functions apart from their mitigation strategies are in place. struggling to break out of the mouldless mature peers. This is reflected of being little more than a digitisedin many ways, but one example is But more importantly—especially from paper trail. Fortunately, the emergencethat procurement organisations are a savings performance perspective— of cloud and SaaS delivery modelsincreasingly looking for new traits and contract compliance needs to be have created a market for wraparoundare specifying these traits as essential monitored and seen as an important procurement services that providein the recruiting process; competencies KPI for category managers (again end-user shopping experiences thatsuch as executive communication skills an internally focused activity). This match leading online commerceand change management capabilities can only be achieved by connecting solutions as well as business networkare more sought after than traditional strategic and operational procurement, solutions. These fill the e-procurementprocurement skill sets such as taking into account the fact that warehouses with appropriate contentcategory competence and negotiation category management is as much, while providing connectivity andexperience2. if not more, an internal business communication channels for buyers development activity as it is about and suppliers alike.Organisations that have already supplier relationship management.implemented procurement technologyto support strategic as well as It is also important to note that to gainoperational activities are now looking essential transparency into spendfor ways to extend usage. patterns, into process and channel14
  15. 15. Supplier Relationship Management (SRM) Research 2012-2013Usability information, they will. Given flexible procurement channels, they will even SourcesFor many, usability is seen as little more comply with procurement processes,than a shiny user interface. In reality, 1. Hugh Baker and Tim Laseter, Booz thereby minimising maverick spendhowever, it is much more. Though & Co. – Strategy and Business and expanding procurement’s controlmany ERP-based e-procurement reprint 02204 (originally published of are lagging in the area of user in 2002)experience, that issue is addressed by 2. SAP and Procurement Leadersmany independent third-party vendor Mastering Demand - Key Drivers for Modernsolutions3 (including Capgemini’s IBX Management Procurement, 2011Platform). Equally important is theissue of enabling users to interact with Mastering demand management is 3. Spend Matters - Getting the Mostprocurement technology from mobile a complex task. Procurement needs from ERP Procurement Applicationsdevices. to be able to communicate benefits – Focusing on the User Experience clearly in a business context, control and Content, 2011Many operational procurement and monitor spending in near to realactivities, from requisitioning to time, as well as provide supporting 4. Gartner Research - Key Predictionsapprovals as well as access to spend technology that is truly user-friendly – for IT Organisations and Users inand performance data, can and should providing necessary insight and tools in 2010 and Beyond, 2010be accessible on the move. In fact, an on-the-go context.Gartner Research predicts that mobileinternet access will overtake desktop This ability to coordinate, cooperateinternet access in 20134. and enable the organisation to act in unison from a spend managementWith workforces going mobile, speed perspective is manifested in leadingof business accelerating, globalisation procurement functions. They haveof the supply base being the norm traversed into the upper reaches ofrather than the exception, self-service the framework outlined above withoutneeds to encompass mobile devices losing traction in the lower a greater degree. Procurementtechnology cannot stay on the Delivering sustainable procurementdesktop; it is a key enabler when value—as in savings, efficiency,striving for procurement excellence, control and transparency—is reliantso it needs to be at the fingertips of on procurement being able to addressprocurement professionals as well as challenges on all levels:the wider organisation. • Increasing competitive pressure in the supply base to capture margins,Guided buying as well as nimbly shift supply to low cost/high value locationsManaging demand can also besupported by empowering end users • Managing demand, leveragingto make informed procurement innovative technology, anddecisions. By providing end users leveraging guided buying principleswith procurement intelligence suchas delivery precision, quality ratings • Changing management capabilitiesand other supplier performance to drive supplier innovation in orderindicators in parallel to procurement to generate increased valueguidelines and policy would provide thefoundation of guided buying that goesbeyond traditional catalogues.To paraphrase Google’s famous tagline“Do the right thing; don’t be evil”,procurement needs to trust the enduser to do the right thing. Given enough 15
  16. 16. Supplier Relationship Management (SRM) Research 2012-2013The Potential of Supply Chain FinanceAuthorMerel Plante16
  17. 17. Supplier Relationship Management (SRM) Research 2012-2013W hat would be the effect on For many companies, the situation buyers. But with the difficult economic your company’s relationship described above seems impossible climate that companies find themselves with its suppliers if you to reach. A company’s suppliers will in today, combined with the terms andwere able to pay them immediately always prefer to have the shortest conditions banks put upon companiesafter receiving goods and services? payment terms possible while the in the current environment, this solutionWhat if payment terms were open for company itself will always prefer to have is no longer sustainable. With everydiscussion and could be improved the longest payment terms possible. organisation in the supply chainfor buyers and suppliers alike? What Moreover, as that same company is actively trying to protect its bottomwould be the effect on your company’s also a part of a larger supply chain, it line, all parties must show value forfinancial performance if, on the one too will want to negotiate the shortest their money and make the best use ofhand, it could achieve favourable payment terms with its own customers. their limited resources. In response, afavorable payment terms from its Nevertheless, many companies new market for supply chain financesuppliers, while on the other hand today are in fact able to overcome solutions has was paid immediately by its own this dilemma of divergent prioritiescustomers? The short answer is that (and achieve the benefits described Supply chain finance is thereforeultimately the cost of goods for buyers above) through the use of supply a means to have a third companywould be greatly reduced while access chain finance. involved in the payment circle and ‘buy’to financing and risk exposure for the outstanding payments from thesuppliers would be greatly improved. buyer to pay out the supplier faster. SeeThis of course would reduce the What is supply figure below for more insight into supplyinherent friction between buyers and chain finance? chain finance.suppliers and could lead to a level Traditionally, suppliers have beenof supplier collaboration previously responsible for facilitating commerceunheard of. by providing financing (usually in the form of favourable payment terms) toFigure 3: Typically SCF involves three parties and a common platform to execute an operation. Checks and balances are setin the payments platform to minimise the risk 17
  18. 18. Supplier Relationship Management (SRM) Research 2012-2013Why might your company Benefits to a Payment Provider analytics for invoices and electronicbe interested in supply The payment provider can build invoice presentment and payment (EIPP).chain finance? stronger collaborative relationships with customers, despite the unfavourableThe dilemma of the divergent priorities Organisation economic climate organisations facebetween buyers and suppliers is well currently. A payment provider can use We have noticed that Finance andknown. Unfortunately, the potential of the largest party as an anchor for the Procurement teams typically drivesupply chain finance is much less well financial transactions, who is often the the SCF process in an organisation.known. With the current economic buyer with a better credit rating instead Collaboration at the executive level canoutlook still looking quite bleak, it is of a smaller supplier. As the goods are align disparate payment, collections,undoubtedly only a matter of time already delivered and transformed into cash management and inventorybefore companies start to better higher value goods at the buyer site, policies that can otherwise workunderstand the topic of supply chain the basis for the finance is very solid. at cross purposes when operatingfinance and begin to implement some independently.of the many solutions available today. This sounds like a win-win situation. So what do you need to have in place to As key metrics you will find centralisedAs alluded to in the introduction, there start? receipt and imaging (or manual) dataare many potential benefits to supply entry, coupled with decentralisedchain finance solutions. Below is a approvals. Approximately 85% ofselect list of just some of the most What do you need to have the best-in-class companies inobvious benefits for buyers, suppliers in place? SCF have been able to achieve this.and payment providers. We have seen that companies that Furthermore, the majority of best are successful in SCF have the right in class organisations have activeBenefits to Buyers processes, organisation, information cross-functional coordination andBuyers benefit from increased flexibility collaboration amongst functional sharing, performance measurementin cash flow (without changing areas such as accounts payable, and technology in place. In this chaptercontract terms), the potential for procurement, finance and IT. we will elaborate more on these criticalimproved payment terms, and reduced success factors.supplier risk. Moreover, they benefit Information Sharingfrom a reduction of working capital Processes More successful enterprises inrequirements through improved days It all starts with receiving the goods, SCF have translated their paymentpayable outstanding measurements. and matching, and subsequently strategies into policies and specificIn the long term, this results in a processing the invoices to the tasks to direct employee behaviour. Tomore stable supply base, improved receivables. The best companies who fully understand the options availablerelationships with suppliers and a use SCF have clear accounts payable in SCF, employees should be providedreduction of cost of goods purchased policies to guide their staff. Moreover, information they need to understanddue to a better cash flow position of they have applied standardisation of why different financing options canthe supplier. accounts payable processes across be beneficial and how they can be multiple locations or business units. executed once selected.Benefits to Suppliers These companies also have automationSuppliers benefit from lower risk, We see that information sharing is a technologies, to further speed upbetter visibility into invoice settlements, weak area for all types of organisations their already well-defined proceduresimproved and more predictable cash in general. Only about a quarter of the that are necessary to ensure efficientflows as well as payment certainty and best-in-class companies have access invoice processing.increased flexibility for their business. to the financial information pertaining toSimilar to the buyers, they also benefit their business partners. More than half As key metrics, you will find that thefrom an improvement in working of the best-in-class companies have best-in-class companies in SCFcapital through improved days sales system-level controls for segregation have the ability to access SCF at alloutstanding (DSO) measurements at of duties for each transaction, but a stages in the supply chain, and havea lower financing cost. Benefits are little less than half of the firms have implemented or are in the process ofnot one-off, but can take effect when complete audit trails on demand. adopting payment scheduling, spendsettling new contracts in renegotiations.18
  19. 19. Supplier Relationship Management (SRM) Research 2012-2013Performance measurement Technology in placeThe successful firms who have At the beginning of an SCF program,adopted SCF have set up performance segmentation of the suppliersbenchmarks to constantly review their needs to be achieved for successfulperformance and take appropriate implementation of the technologyremedial action. These measures can platforms. Furthermore, what we seebe used to further create efficiencies, is that, firms look to minimise one-such as identification and reduction to-one interfaces with their suppliers,of components as labour hours, and which can be achieved by growth oflower costs of goods purchased. e-payment solutions.Of course, many parameters such as Technology is another area wherefinancial performance can be used as organisations face challenges. Thebenchmarks to measure performance. majority of the best-in-class companiesSome parameters which have been are able to segregate partners tomeasured by Aberdeen in a survey are: prioritise SCF enablement. Only a small number have been able to• 64% of best-in-class have online establish a single platform to bring visibility into financial supply buyers, suppliers and financial chain events. institutions together.• 42% of best-in-class firms have online visibility into shipment status Challenging? Definitely. But when and in-transit inventory. all of the activities above are in motion or already implemented to lift your company to a higher maturity level, supply chain finance cannot continue to be ignored as a means to further strengthen the whole supply chain. 19
  20. 20. Supplier Relationship Management (SRM) Research 2012-2013Procurement and InnovationBeyond the Establishment of a PartnershipAuthorsKirsten Schipper & Thomas Dahm20
  21. 21. Supplier Relationship Management (SRM) Research 2012-2013T he involvement of suppliers for manufacturers in Japan and the innovation in organisations has Netherlands demonstrates that the been a reality for many years. early involvement of suppliers speedsMost organisations consider their up the innovation process, whichsuppliers as being one of the most, if ultimately delivers the benefit of a newnot even the most, important sources product or service being ahead ofof innovation. Supplier relationship the competition and saving time and,management can increase the level of therefore, money.innovation-driven procurement, andprovides the procurement function Secondly, early supplier involvementin the organisation with the tools increases the amount of innovation.and technology to make the early Ensuring that the suppliers areinvolvement of procurement a success. actively participating in the process of innovation in a structured mannerWhen talking about innovation and results in more innovation.the innovative capacity of suppliers,innovation is not solely limited to new Thirdly, even basic research, but evenproduct development or the invention more importantly, the developmentof something new. Many innovations and launch of a new product bearsbecome worthy of their name because risk. The participation of suppliers inthey are the new combination of this process will contribute not onlyexisting elements or because the to sharing of benefits but also theinnovativeness lies in the restructuring mitigation of risks.and improvement of a process, whichresults in a significant advantage over The challenge for procurementthe competition. The classic process departments in organisations hasimprovements focus on cost or time been the balancing act betweensavings while most companies also the traditional role of negotiating theattempt to fulfill the customer’s demand most beneficial form of commercialfor CO2 reduction and sustainability. agreement, whilst also facing the challenge of maintaining a trustingThe decision to make use of a supplier partnership.originated from the realisation of alack of in-house expertise about Many procurement organisations arethe acquired product or service – a aware of the benefits of collaboratingmake or buy decision. Whenever with suppliers as a source of innovation.this externally acquired product or However, many have not yet formalizedservice is involved in any kind of these relationships. The studyinnovation process, the suppliers’ referred to earlier identified six inter-expertise should be incorporated organisational arrangements, whichinto the innovation process since alluded to the involvement of suppliersthe own expertise in this area has in innovation activities: organisationbeen determined to be lesser than of communication, colocation, non-the suppliers’. There are three major disclosure agreements, formalreasons why this involvement should contracts, intellectual property rightstake place early in the innovation and manuals. There are several otherprocess: the speed of innovation, the inter-organisational arrangementsamount of innovation and the reduction where companies share organisationalof risk. infrastructure or even the launch of joint products to the market in orderThe first reason is to be able to innovate to demonstrate the quality of thefaster than the competition. Recent partnership.research conducted with high tech 21
  22. 22. Supplier Relationship Management (SRM) Research 2012-2013 Figure 4: Procurement involvement in innovation Cost reduction opportunities Traditional Innovation Driven Procurement Procurement Involvement Involvement Supplier Involvement Life cycle value determined Concept stage Project stage Prototype stage Revision stage Product stage The more these inter-organisational As a next step it is essential to translate arrangements are made that these arrangements into measurable demonstrate the intensity of the Key Performance Indicators partnership, the more an organisation (KPIs). All of the inter-organisational should have SRM as a tool to manage arrangements need to be formalised and structure this relationship. in jointly developed agreements that go beyond a standard non-disclosure In order to reach the next level agreement. For this reason, contract of maturity in innovation-driven management as an element of procurement, SRM can help to supplier relationship management, formalise and digitalise this transition. will become much more complex in Many “old school” procurement the future. Many contracts are still professionals have been struggling limited to commercial terms and the with the balance of negotiating with a level of digitalisation of contracts in supplier, and being the manager of a many organisations is still immature partnership with that same supplier. in that they are paper-based and filed This new mindset allows procurement away into filing cabinets, never to be professionals to organise regular looked on again. Digital cloud contract supplier innovation meetings and management solutions better equip work in an entirely new way. “Sharing procurement professionals with three is winning” and “win-win situation” powerful functionalities with which to approaches to partnerships have been manage supplier partnerships: developed.22
  23. 23. Supplier Relationship Management (SRM) Research 2012-2013• SRM systems allow users to store overcome difficulties to bring all of the agreements relating to joint stakeholders of different companies partnership activities in a central and disciplines together and align them. repository; Today’s challenge is to set up• they allow users the flexibility structures to successfully measure to alter agreements by mutual and manage suppliers and build agreement, which is useful in fast processes and procedures to changing dynamic development intervene if KPIs are not met. These projects such as SCRUM systems exist – unfortunately, in processes most organisations, digital contract management is not utilised to its full• and most importantly they allow extent. SRM offers a solution for a procurement professionals to lack of formalisation and control in an measure the success of the often unclear process of collaborative relationship and identify areas innovation. These formalised systems for improvement. can be supported by the structuredThe challenges in Supplier Relationship use of social media platforms toManagement with regards to facilitate communication betweeninnovation-driven procurement are the parties involved. Successfulthat they are no longer limited to the supplier relationship managementmindset and the required paradigm requires social interaction in a trustingshift in the mindset of individuals partnership, within a framework ofin procurement departments. This clearly defined and measured targets,has (in many cases, successfully) and performance measures.been achieved in many companies.Procurement has been able to 23
  24. 24. Supplier Relationship Management (SRM) Research 2012-201324
  25. 25. Supplier Relationship Management (SRM) Research 2012-2013Functionality Analysis 25
  26. 26. Supplier Relationship Management (SRM) Research 2012-2013SRM Functionality AnalysisAnalysis performed bySarissa Alleijn26
  27. 27. Supplier Relationship Management (SRM) Research 2012-2013For organisations embarking on their Set up of the Supplier When selecting or evaluating anSupplier Relationship Management application, it is important to determine Relationship Management(SRM) journey, often the most difficult which functions are critical for yourchallenge is the ability to understand Survey company’s procurement processes.the spectrum of suppliers that could A functionality analysis is conducted Therefore a weighted score addressingsatisfy your requirements. based on a list of 171 questions, your preferred functionalities may covering the entire spectrum of the result in a different outcome fromThe key questions in support of this procurement process. These questions those shown in this survey. In order tothat are often considered are: represent the “most asked-for” and distinguish between the functionalities the “most-critical functionalities”, as of the applications, it is necessary• Which applications are available on we recognise them from our client to understand which functionality the market and what functionalities discussions and interactions. Vendors supports the procurement processes. do these applications provide? are given the opportunity to indicate• Do applications offer the same whether the requested functionality is To assess the level of support, we services across all aspects of the available or not. divided the overall SRM process into procurement function or are they nine sub-categories: specific to one component of SRM? When interpreting the data it is 1. Procurement Intelligence important to remember that thisThis chapter will elaborate further on analysis is based on a series of 2. Project Managementthese questions. questions designed to address whether 3. Sourcing the software covers a specific set of a. Electronic TenderingSupplier Relationship Management functions. It is important to note that b. eAuctioningdepends on collaboration amongst all of the questions have been scoredthe enterprise’s internal and 4. Supplier Management without weighing. This means that aexternal suppliers for survival and high or low score does not indicate 5. Contract Managementprogress. Collaboration across whether an application is good or bad; 6. Catalogue Managementsourcing strategies, management it merely states the coverage of theand governance remains critical 7. Operational Procurement SRM functionality within the the success of supplier 8. External Resourcesrelationship management. 9. BPO ProcurementFigure 5: Capgemini Procurement Process Model Procurement Intelligence Analyse Develop Place Approve needs & market Sourcing Requisition Requisition dynamics Strategy Manage Procurement RFQ Strategic Supplier Place Manage Order Process Sourcing Performance content Order Cycle Cycle Supplier Selection Verify process Receive Negotiate & Contract and invoice goods Finalisation Project Management 27
  28. 28. Supplier Relationship Management (SRM) Research 2012-2013Overall Functionality offer Operational Procurement 5. Catalogue Management functionality. While the 2010-2012 is an element of OperationalAnalysis SRM research showed that there Procurement. Therefore, it isAs in previous studies, this year’s was still a greater focus on Sourcing not surprising that the vendorsvendor review shows that the than on Operational Procurement, that do not offer Operationaldifferences between applications are this year the survey shows that Procurement functionality also domost visible in coverage at a functional vendors realise the importance not offer Catalogue Managementlevel. of the Operational Procurement functionality. Catalogue Creation cycle as the backbone of the and User Capabilities are theSome applications provide full coverage Procurement process. subcategories with the highestfor all subprocesses, whilst others can functional coverage (average scorebe considered niche players supporting 86 percent of the vendors provide of 80 percent).only a selected functionality. Although Electronic Tendering functionalitythe reviewed SRM applications are while 66 percent provide 6. This survey shows that somevery capable, there are substantial e-Auctioning functionality. In line full suite vendors have starteddifferences between these applications with previous editions, Electronic to develop External Resourceand of course each of them will have Tendering is perceived by all functionality, indicating that thisa different fit within your organisation. vendors as core functionality as functionality is still growing rapidly.Although it might seem that certain compared to eAuctioning. This supports the observationapplications have a low overall score, made in 2010-2011 that there is stillwe cannot conclude these applications 4. In line with the observations made scope for improvement as some fullare of lesser quality. in the previous editions, Contract suite vendors not offering External Management functionality has Resources functionality will startOverall conclusions from this year’s continued to improve (90 percent to develop this functionality in thesurvey: of the vendors offer Contract near future. Most of the vendors Management). Only four vendors offering External ResourcesConsidering the survey as a whole, the responded with a score of less than functionality offer high functionalityfollowing represent the major findings 70 percent coverage in this area, (average >90 percent) regarding theand conclusions: with the average alone above 84 first part of the process (Specify, 1. Out of all of the vendors surveyed, percent. The majority of the vendors Approvals, Requisitioning), more only five do not offer Procurement offer Contract Management than they support the second part Intelligence functionality, which in combination with Sourcing of the process (Selection & Order, demonstrates the importance of and Operational Procurement Monitoring and Aftercare). Since tracking operational improvement functionality. However, there the demand for External Resources benefits, and assessing and are vendors that offer Contract functionality grows in organisations, ensuring compliance. There Management solely as an extension it can be expected that this area is, however, a huge diversity in to the Sourcing or Operational will further increase functionality coverage ranging from 97 percent Procurement cycle. There is even and richness of capability in the to 19 percent. And, in addition, one vendor that offers Contract near future. none of the vendors surveyed Management as a standalone module since the relationship 7. BPO remains a strong area for have full coverage of the service with Sourcing and Operational growth with an average of 62 offerings, which leaves scope for Procurement is totally absent. percent. “Procurement Intelligence” more improvement over the next and “Sourcing” continues to be a few years. Contract Compliance is still the key priority on the list of top 5 BPO- least developed area with an based scenarios in use. “Contract 2. Project Management is still a average of 76 percent. Since Management” and “Catalogue key differentiator, with vendors Contract Compliance is the next Management” are new entrants in either providing functionality in this phase once P2P compliance has the top 5 this year, whereas “Project area (59 percent of the vendors been achieved or is maturing, it is Management” and “External surveyed) or no functionality anticipated that this area will further Resources” are not high on the whatsoever. improve in functionality over the priority list as BPO scenarios. 3. 79 percent of the vendors surveyed next few years. offer e-Sourcing functionality as compared to 76 percent who28
  29. 29. Supplier Relationship Management (SRM) Research 2012-2013 Figure 6: gives an overview of the available functionality of each vendor application. The Y-axis represents the vendors and the X-axis represents the categories within the SRM suite. nt me t ge nt t en ce na e en t en en Ma em em rem lig s ec t g ag em na g roc u tel rce roj na t in ou a an Ma al p en es gP tM M e on lR rci ng cin ac pli er gu ati rem na ll ou ur ntr p at alo er oc u ter O era S So Co Su C Op Pr Ex BP OvSAP SRM 98%Ariba 92%Proactis 91%Eeebid 88%Esize 88%Tblox 85%SynerTrade 82%Proquro services 82%BravoSolutions 75%Hubwoo 71%IBX 70%Pool4Tool 66%Oracle 63%Volt 61%Peoplesoft 59%Inconto 55%JD Edwards 51%Bupros 47%Perfect commerce 42%BasWare 41%Archifact 38%Negometrix 36%VendorLink B.V 32%bipsolutions 30%Upside Software 25%SciQuest 24%Verian Technologies 23%Spend360 19%Ecovadis 9% 29
  30. 30. Supplier Relationship Management (SRM) Research 2012-2013 Analysis per Category The in-depth application review is structured according to the nine When selecting an SRM tool, you are subcategories listed earlier. likely to have certain requirements that These subcategories have been further are more critical than others. If you divided into a number of functional are looking for a full-suite application, categories as shown the overall functionality scores may be in Table 7. sufficient for your selection. However, if you are looking for a particular functionality or a set of functionalities, a more in-depth review of the results is required.Table 7: Additional Functional Categories Procurement Project Supplier Contract Catalogue Operational External BPO Sourcing Intelligence Management Management Management Management Procurement Resources Procurmeent General Project General General General General General Specify BPO Management Approvals Strategy Evaluation & Authoring User Requisitioning Development Development Capabilities Requisitioning Spend Demand Compliance Request for Analytics Aggregation Database Supplier Quotation Selection & Repository Capabilities Order Electronic Approval Tendering Administration- Monitoring Content and Purchase Order Operational e-Auctioning Review Approval Transmission Aftercare reporting Negotiation Administration- Receiving and Contract Creation Goods and Signing Services Administration- Maintenance Invoicing30