At the program level, David Atkinson, MD of consultants Four Pillars, provides a model for developing your organization’s supplier management strategy by introducing the five critical questions that will mean the difference between failure and success. For each of these questions, answers are provided that will get you thinking about how you will make Supplier Relationship and Value Management work for your organization.

1. SUPPLIER RELATIONSHIP &
VALUE MANAGEMENT
The Five Program Killers, and How to Overcome Them

2. Please note that your microphones have
been muted for the duration of the webinar.
Having technical issues?
Should you have any technical issues, please let us
know via the 'Questions' box on your GoToWebinar
panel.
Any questions for our Q&A?
Send your questions through to us at any time via the
'Questions' box on your GoToWebinar panel.
We'll then put them to David in the Q&A after the
presentation!
Welcome to the webinar

3. David Atkinson
Founder & Managing Director
Four Pillars
Clients in pharma, financial services, manufacturing, oil & gas, travel, logistics,
facilities, professional services, transport, government.
Accredited trainer from Harvard/MIT Program on Negotiation.
20 year procurement career in consumer goods, automotive
and aerospace sectors.
From Buyer at Black & Decker to Procurement Director at Rolls Royce.

4. Five SRM Killers
1. No joined-up strategy: SRM practice based on selectively
investing in a few good ideas.
​2. Limited (if any) cross-functional team-working, as
stakeholders have other priorities: Support from top
management too often empty rhetoric.
4. No coherent method: What are we asking people to
actually do every day?
3. Unrealistic targets: Failing to recognize that benefits
from SRM are emergent.
5. Inadequate capacity planning: Too few resources on
the buying side, and from the supplier.

5. What if there was a way to get SRM right?
This webinar is as much about strategy as it is about SRM
practice. Both are important, but sequencing is the key.
1. Developing a strategy for an SRM PROGRAM
2. Doing it - SRM as a METHOD

6. Let’s think about ‘strategy’ for a moment
70% strategies fail at the execution stage.
–Kaplan & Norton
Only 9% of companies achieved the goals
stated in their documented strategies.
–Bain
What makes the difference between organizations
that struggle, and those whose strategies appear
to work?

7. But first, here’s how not to do it: Copying others or simply
selecting activities from a menu of good ideas.
Appetizers
Category Management: Let’s get it right this time
Senior level meetings: They know everything, right?
Extend payment terms: It’s only money
Dedicated SRM IT platform: Shiny new toy
Mains
'Partnering’: They’ll love that!
Collaborate to innovate: Get the suppliers to do the idea-generation heavy-lifting
Savings target challenge: Let’s just ask them for cash
Cost Transparency: Tell them ‘openness’ is one of our values
Performance Reviews: Shouldn’t we meet more often?
Desserts
Preferred supplier status: That’ll encourage them to give us money
Performance metrics: Better than just shouting at them
SRM Strategy: I’m confused; why are we doing SRM again?
Take your pick....many people do.

8. A better way: Building an SRM strategy based on cause and effect
Sectors & companies who have successfully embedded SRM have real clarity here….
Overarching Purpose
“How will we define the purpose of SRM and its contribution to the business?”
Stakeholder Perspective
“To succeed, what value must SRM bring to our internal stakeholders?”
ROI Perspective​
“What must SRM’s financial contribution be to stakeholders and the business?”
SRM Process Deployment​
“To satisfy the business & our stakeholders, which SRM activities must we excel at?”
Structure, Systems & Competence Perspective
“To excel in applying SRM processes, how must we organize, build skills & improve?”
Overarching Purpose: “How will we define the purpose of SRM and its
contribution to the business?”
Pause and think….”why are we investing in SRM?”
Overarching Purpose
“How will we define the purpose of SRM and its contribution to the business?”

9. Overarching Purpose: What are you doing SRM for?
Test your intention against this definition….
“SRM is the
(1) deliberate pursuit and
(2) systematic management of
(3) post-contract value from
the organization’s key supplier
relationships.”

10. Stakeholder Perspective: “To succeed, what value must SRM bring to
our internal stakeholders?”
Service users, specifiers, senior execs, etc. Who gets impacted by suppliers and SRM?
Overarching Purpose
“How will we define the purpose of SRM and its contribution to the business?”
Stakeholder Perspective
“To succeed, what value must SRM bring to our internal stakeholders?”
ROI Perspective​
“What must SRM’s financial contribution be to stakeholders and the business?”
SRM Process Deployment​
“To satisfy the business & our stakeholders, which SRM activities must we excel at?”
Structure, Systems & Competence Perspective
“To excel in applying SRM processes, how must we organize, build skills & improve?”

11. Stakeholder Perspective: Who benefits from SRM?
Which stakeholder constituencies are dependent for their success
on supplier inputs?
To what extent do they consider SRM as just another procurement
initiative – one that gets in the way or slows down their day job?
Precisely, what’s in it for them?
In other words, how can SRM make their work easier and help them
be more successful?

12. ROI Perspective: “What must SRM’s financial contribution be to
stakeholders and the business?”
We’re not doing SRM for fun. There must be a return on our investment.
Overarching Purpose
“How will we define the purpose of SRM and its contribution to the business?”
Stakeholder Perspective
“To succeed, what value must SRM bring to our internal stakeholders?”
ROI Perspective​
“What must SRM’s financial contribution be to stakeholders and the business?”
SRM Process Deployment​
“To satisfy the business & our stakeholders, which SRM activities must we excel at?”
Structure, Systems & Competence Perspective
“To excel in applying SRM processes, how must we organize, build skills & improve?”

13. ROI Perspective:
Value can and often does leak because of inadequate supplier management.
Costs
escalate
Risk not
mitigated
Revenues
fall
Reputations
damaged

14. Depending on various study estimates, significant
increases in value that can be secured from SRM’s diligent
application.
ROI Perspective: Benefits - estimates of tangible value
delivered through the deployment of SRM.
2-6%
23%
3%
21%At Rolls-Royce, it was 21% plus massive improvements
defects % and OTIF delivery.
Where that’s value improvements as a percentage of total
spend, or from specific initiatives, it’s worthwhile.

15. Develop a tailored and compelling value proposition for each
stakeholder group – with numbers.
ROI Perspective: Practical steps
But be careful in imposing top down targets – value for money
improvements from SRM are emergent. There are so many
types of intervention, you don’t know what value is achievable
until you begin to mine for it.
Focus on tangible outcomes – cost, risk, lead-time, revenue
growth, etc.

16. SRM Process Deployment: “To satisfy the business & our stakeholders,
which SRM activities must we excel at?”
The day job. What are we asking people to do?
Overarching Purpose
“How will we define the purpose of SRM and its contribution to the business?”
Stakeholder Perspective
“To succeed, what value must SRM bring to our internal stakeholders?”
ROI Perspective​
“What must SRM’s financial contribution be to stakeholders and the business?”
SRM Process Deployment​
“To satisfy the business & our stakeholders, which SRM activities must we excel at?”
Structure, Systems & Competence Perspective
“To excel in applying SRM processes, how must we organize, build skills & improve?”

17. SRM Process Deployment
The SRM Method -
where the rubber
hits the road.
Procurement must
excel here, as the
function normally
takes the lead in
facilitating SRM’s
deployment.
Step4:
RelationshipStrategy
SupplyBase
Segmentation
Step1:
StakeholderEngagement
Step2:
Cross-functional
SRMTeam
Step3:
Relationship
Analysis
Supplier
Engagement
SRM Program & Phased Implementation Plan
Process, Systems, Tools & Templates
Performance Indicators & Benefits Tracking
Organizational Negotiating Competence

18. SRM Process Deployment
Effective Supplier Engagement will utilise a
range of methods. Here are some examples.
Engagement 3
Value
Transformation
Engagement 2
Value
Development
Engagement 1
Value
Protection
Strategic Alliances
Innovation capture
Supplier Development
Lean / Agile process
improvement
Performance reviews &
dashboards (SPM)
Contract and Risk
Management
Data sharing with supplier
Optimized Value?

19. SRM Process Deployment: “To satisfy the business & our stakeholders,
which SRM activities must we excel at?”
The day job. What are we asking people to do?
Overarching Purpose
“How will we define the purpose of SRM and its contribution to the business?”
Stakeholder Perspective
“To succeed, what value must SRM bring to our internal stakeholders?”
ROI Perspective​
“What must SRM’s financial contribution be to stakeholders and the business?”
SRM Process Deployment​
“To satisfy the business & our stakeholders, which SRM activities must we excel at?”
Structure, Systems & Competence Perspective
“To excel in applying SRM processes, how must we organize, build skills & improve?”

20. Invest in SRM skills: 57% of CPOs feel teams lack skills to deliver
procurement strategy. (Deloitte) You might wish to develop SRM
specialists.
Structure, Systems & Competence
“Be so good, they can’t ignore you.”
Introduce SRM technology if you think it’ll make a real difference.
Remember, technology can be extraordinarily helpful but,
it’s not necessarily the place to start.
Base your organization design and team-working around your
SRM processes.

21. Kill the SRM Killers
1. No joined-up strategy: No longer. Follow the
strategy model and build a clear way forward.
2. Limited (if any) cross-functional team-working,
as stakeholders have other priorities: Focus on meeting
their needs and support their success.
3. Unrealistic targets: Segmentation, opportunity
assessment, and rigorous application of your SRM
process. Improved value will result.
5. Inadequate capacity planning: Dedicate resources
to the SRM task, and secure wide acceptance that it’s
a core business competence.
4. No coherent method: Design, then apply your SRM
process with determination, and clarity of roles and
responsibilities.

22. Q&A
d.atkinson@4pillars.org | +44 (0) 121 373 1797