Commercial Insight: Supplier management – why positive supplier relationships are key to success


supplier management, procurement

Building positive and sustainable relationships with strategic suppliers should be at the heart of your supplier management strategy.

Expertis was grappling with over-engineered legacy processes, high business demand for procurement support and a lack of capability in the supplier management space.

Outdated processes and disorganized supplier management

When we started working with Expertis, they had recently been divested from a much larger organization. They were trying to keep the business running while working out how to right-size their teams, processes and systems. A company with an annual spend of over £5m per year across more than 150 suppliers, the Expertis team had reduced from 15 to 8 as part of the business restructure. Their first job – to introduce a new finance system – had put pressure on a team who were already over-stretched managing their day jobs.

We were initially engaged to objectively assess the issues and recommend how to address them. Their processes were no longer fit for purpose given the size shift in the organization and there was no organized approach to supplier management:

  • They were treating all projects and engagements equally without assessing risk or value, leading to too much work, a lack of prioritization and missed opportunities.
  • Historically, they had addressed issues by adding more forms and process which didn’t join up easily with those in the rest of the business. This led to confusion inside and outside of the team, and resulted in poor decision-making and a lack of audit trail.
  • Confusion in the wider business around the role and purpose of Procurement was leading to frustration and protracted timescales.
  • Within the team, the focus was on sourcing activity rather than the full procurement lifecycle. There was a lack of supplier relationship management (SRM) activity or capability in place.
  • Without a formal SRM approach, they faced commercial exposure and risk. Their licensing was not being correctly managed, giving leverage to the suppliers and putting Expertis on the back foot.

Improving processes and supplier management

There were several issues to tackle:

Step 1: Process improvement

The starting point was to design and implement a full end to end procurement lifecycle, including a risk-based framework. The business became empowered to manage the low-risk, low-value projects, which allowed the Procurement team to focus on the high-risk activity.

This helped the business better understand and value the role of Procurement, and significantly reduce response times from the team on larger projects.

Step 2: Developing a toolkit

Underpinning the new simplified process was a straightforward toolkit, which included ‘how to’ guides, a risk assessment tool, new document templates and clarity on roles and responsibilities. We collaborated with key stakeholders to ensure the processes dovetailed with those in other departments. Providing training in conjunction with the internal comms team was key to a successful implementation.

Step 3: Supplier management

Expertis only had one supplier relationship manager in place who was operationally managing their largest supplier, meaning they weren’t able to efficiently manage all their strategic suppliers that represented high spend, risk or dependency.

An SRM framework was required the allow true partnerships to be put in place which would optimize value for both parties, driving tangible, commercial benefits and service delivery that had been agreed during the selection and negotiation stage. This was very much a blank sheet of paper for us to design from scratch.

  • Framework: The risk framework we developed helped Expertis identify their strategic suppliers based on the contract value and their supplier risk profile.
  • Data driven: The framework relied on key information such as historic investment, associated contracts, budgets, roadmaps, planned projects and issues. Much of this information had been pulled together by hand and was inconsistent and out of date. We worked with them to get one source of truth, which freed up resource time for management activity. The information could then be used to support:
  • Meeting framework: Regular sessions were scheduled monthly, quarterly and bi-annually, with appropriate and ‘matched’ attendees at each stage. Part of the toolkit we developed was a complete framework to cover what ‘good’ looked like in all these areas, with suggested agendas and attendees.
  • Change management: Change is an inevitable part of any organization. It must be managed well to maintain healthy supplier relationships and ensure they are still fit for purpose for both sides throughout the life of the contract. The new governance models and processes allowed Expertis to contract for and manage change effectively and ensure successful delivery.

Step 4: License management

We partnered with a specialist software consultancy, one of the ITAA partners, to review their existing agreements and needs. We also assessed their supplier strategy, preparing them for supplier meetings that would deliver much clearer objectives and commercial results.

Collaborating with the company’s Legal team, we helped align the fragmented contract structure, delivering a set of standard contract templates that could be applied to a variety of product and services purchases.

Effective procurement and supplier management processes and frameworks

Expertis has refocused Procurement and SRM teams who understand their roles and can prioritize strategic, core activity that will provide the most value to the business.

They have a clear, simplified process which is speeding up delivery times, driving good decision-making and ensuring all interested parties are engaged at the right time. It has also empowered other parts of the business to manage some activity themselves, driving a more positive internal view of the Procurement team as both sides are set up for success.

The Procurement team has a robust toolkit that is reflected on their internal website, which helps drive skills and capability in the existing team and induct new team members going forward.

Expertis now has centralized framework agreements with its key software providers and a fully aligned SRM approach. This has significantly reduced commercial and governance risk. They have also introduced a software asset management tool which is optimizing the current estate and delivering flexibility for asset use across all parties. With visibility of their key suppliers and their performance, the team is now able to successfully drive value across the full procurement and SRM lifecycle.

They are delighted that their commercial arrangements now align to their business strategy.

Contact us to see how the Commercial experts at ITAA can help improve your supplier management approach and outcomes.

*Protecting our clients’ confidence is of utmost importance at ITAA. While our case studies are based on true projects, we have used fictitious names and removed or changed other identifiable details.

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