State of Flux: Strategic Supplier Relationship Management
Alan Day, Chairman
Today, what was once vendor management is evolving into SRM – or Supplier Relationship Management. The goal of SRM is working collaboratively with suppliers that are vital to the success of the organization to build trust and deliver mutual value. For over 13 years State of Flux is a leading provider of a holistic approach to managing and collaborating with suppliers. State of Flux works with its clients to create value by standardizing processes, upskilling staff, engendering corporate change, and underpinning the entire SRM program with strong technology and training.
State of Flux’s approach is grounded in data. For eight years they have conducted annual research evaluating industry standards and practices. Today there is over 1,500 global organizations participating, and +750,000 data points on SRM. State of Flux’s research and client engagements validates that well executed SRM achieves 4-6 percent post contract benefits. Also, that SRM positions an organization to double their access to the best resources, preferential pricing and access to the supplier “A” team while quadrupling their access to a supplier’s innovations.
However, the research shows technology usage to support SRM has lagged, with 63 percent of organizations relying on Excel to manage suppliers. These are an organization‘s most strategic, most critical relationships and they are being managed on a spreadsheet. There is an opportunity for CIO’s to use SRM technology to drive change necessary to make SRM a success.
While technology is an enabler to standardizing and embedding behaviors and processes across the organization, it needs to be supported with a change program.
Implementing SRM in your organization starts by creating a value proposition or business case. To do this State of Flux conducts a current practice diagnostic including “a ‘voice of the supplier’ study which provides feedback from strategic suppliers revealing the quality of the relationship and if your organization is a ‘customer of choice,’” explains Alan Day, Chairman of State of Flux.
Following the value proposition State of Flux recommends supplier segmentation, i.e. identification of suppliers who have the most impact on the business, followed by defining the ‘treatment strategies’ of these suppliers, the processes to support these treatment strategies (including SRM technology), defining governance models for each of the strategic suppliers and then roles and responsibilities within these governance models.
State of Flux has developed SRM software “Statess” a private cloud solution accessed via a web browser. Both the organization and suppliers have access and the technology supports tracking of joint account plans, KPIs, goals, business reporting, and relationship collaboration via five key modules focused on management of supplier relationships, performance, risks, innovation, and contracts. Finally, internationally accredited training is available to support professionals desiring to enhance their skills in procurement and SRM.
For the holistic approach to SRM, State of Flux has a framework called the Six Pillars of SRM which helps organizations implement and get value from SRM.
State of Flux’s roadmap includes expanding its global footprint and focusing on growth in North America. They opened their first U.S. office in Chicago in April 2016. The user experience for Statess is also being enhanced including more supplier collaboration, prioritization of action items using artificial intelligence to ensure supplier relationship managers are focused on the most critical activities.
Per Alan Day, Chairman of State of Flux, “I think organizations need to take responsibility for their international supplier relationships because they can’t rely on governments to create collaborative environments anymore. Supplier relationships are becoming more complex where they are suppliers, customers, competitors and partners in one. It is an area worth investing in, as the importance of the supplier relationships is going to increase significantly over the next couple of years.”