A couple of weeks ago, our friend David Atkinson led a webinar as part of the BravoSolution Real World Procurement series. The title was “Supplier Relationship and Value Management – the Five Programme Killers and How to Overcome Them”.
It was an excellent session from Atkinson, who had a long operational career in senior procurement and supply chain roles in organisations such as Rolls Royce. As a consultant, trainer and coach these days his area of deepest expertise is around Supplier Relationship Management, and listening to his thoughts got us thinking about how SRM can and should be applied to the government (public) sector.
If we look at the objectives of SRM, they absolutely apply to both public and private sector organisations. SRM looks to achieve more value from key suppliers by working in a structured and collaborative manner, with strong relationships and clear understanding of the benefits that both parties can achieve. (And note, the benefits do have to accrue to both parties, not just the buyer – otherwise why would a supplier participate and commit seriously to the programme?)
Atkinson defines it like this:
“SRM is the deliberate pursuit and systematic management of post-contract value from the organisation’s key supplier relationships.”
Clearly, that applies – or should apply – in government organisations just as it does for Ford or Nestle. And the sort of key issues and approaches Atkinson described are also in the main very applicable to the sector. For instance, he emphasizes that SRM must help our internal stakeholders and bring them value – it won’t succeed if it is seen simply as a procurement initiative.
He suggests that SRM must have a real return on investment – a financial contribution ultimately to stakeholders and the business. Now this is maybe where the public and private sectors diverge somewhat. We would suggest that the contribution of SRM in government bodies may not be financial but could still be very valuable.
So, for example, if a supplier through an SRM programme can offer a new innovation that supports the key policy goals of the buying organisation, then that has value even if it is not financial or at least not easily measured. But his principle is correct everywhere; SRM must have a real return, and if it is seen as simply a “nice to have” it will not survive long.
So he suggests this: “Develop a tailored and compelling value proposition for each stakeholder group – with numbers. Focus on tangible outcomes – cost, risk, lead-time, revenue growth, etc”.
There is a lot more that is useful and interesting in his webinar – it is still available, free on registration. He gets into SRM process deployment and tips on how to make it happen successfully; clearly, he couldn’t present every aspect in 40 minutes or so, but it is well worth watching and listening to the session.
There is, however, one substantial elephant in the SRM room as far as government buyers are concerned. And that is the effect that regulation has on the design and operation of SRM programmes. To be clear, it does not make such activity impossible or illegal, but it does mean that certain aspects have to be considered carefully. Atkinson didn’t really get into these specifics, so we will pick up on them in another article shortly. But do in the meantime take a look at his webinar which is available on-demand here.