The Challenge of SRM

Archstone Consulting just released the results of their survey of 50 U.S. and Global Companies in the consumer packaged goods, services, retail, and manufacturing sectors that found that over 90% of companies are currently challenged by Supplier Relationship Management.

According to the press release, their survey shows that while many companies have conducted strategic sourcing and outsourcing to reduce costs, few have mastered Supplier Relationship Management as a critical part of enhancing their supply chain and reducing overall costs. In addition companies lacking key SRM capabilities such as supplier stratification, supplier governance, performance management, and supplier development often have inefficient relationships and are unable to realize the full value of their supply base.”

In addition, the survey found that:

  • 58% of respondents report inconsistent, inefficient, and overly
    tactical SRM practices
  • 58% of respondents report an inability to hold suppliers accountable
  • 53% of respondents cite a lack of vision for SRM as a major barrier to
    successful implementation of SRM practices

That’s why I’m pleased to inform you that, starting tomorrow, our weekend series will consist of an introduction to Supply Risk Management 101, followed by Supplier Performance Management next weekend, two key components of Supplier Relationship Management.

When you consider that the respondents to Archstone’s survey who had launched SRM initiatives have achieved (or expect to achieve) a 7-11% reduction in cost of delivery and a 9-13% reduction in cost of quality, the benefits of mastering these two areas are significant.

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