According to the KPMG December 2023 Global Procurement Survey, 400+ procurement leaders agreed that the focus on better relationship practices has improved performance by over 10% with respect to on-time delivery and service level, reduced supply risk, and product and service quality. These same leaders plan to make substantial investments in their SM programs over the next 12-18 months, focusing on the capabilities of the Procurement Team, SM tools, and integrating market insights.
- Achieving customer of choice: Beyond contract value, our experience shows that businesses can gain up to 3% (1) in additional value by improving their supplier relationship management program. Formalized SM framework helps businesses become a “Customer of Choice” of suppliers, leading to competitive pricing access (“favored nation”), top talent, service, volume discounts, supplier thought leadership and lower labor rates.
- Increased compliance savings and value realization: Many companies today spend more on suppliers than on payroll and real estate costs – the right SM framework helps ensure value realization. Businesses often see contractual savings leakages of up to 9% (2) from friction factors such as supplier non-performance, invoice and credit memo errors, and redundancies. Through a structured SM framework, they can further enhance value by not only focusing on “cost” but also “value beyond cost”.
- Generates innovation: Supplier innovation impacts the entire company and improves revenue while reducing costs. An established SM program focuses resources on key strategic suppliers to brainstorm, crowdsource, and innovate new ideas.
- Driving sustainability and diversity in the supply chain: A strong SM framework encourages evaluating, identifying, and aligning your suppliers toward your ESG objectives. It also helps with initiatives around supplier diversity and reporting.
- Heightened risk management: A well-defined procurement governance process aligned to your business needs to solve today’s challenges will help to mitigate risks and address the changes to come..
