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For six consecutive years, Accenture has evaluated the performance and challenges of supply chain executives in the procurement arena. In 2005, Accenture surveyed 229 senior procurement executives from across Europe and the United States to discover how companies can successfully manage supplier relationships to deliver sustainable benefits in the long term.
Says the head of a sourcing practice at a global banking giant, "Senior supply chain executives take note - the 'differentiate or die' philosophy is alive and well. As this report shows, the question is not whether SRM is happening, but how much more value we can realise."
For many chief procurement officers, SRM represents an opportunity to build more robust post-contract award capabilities and ensure that the savings promised during the sourcing process are achieved and even surpassed.
Mike Mitchley, vice president of commercial services, Gold Fields, agrees: "We have moved away from a short-term approach towards longer term partnerships with suppliers. In essence, we've started saying to vendors: 'We want a long-term, mutually beneficial relationship with you. Let's work together to see how we can improve each other's bottom lines.'"
"With the South African Government placing a focus on economic growth and capital investment for infrastructure through its Accelerated and Shared Growth Initiative, organisations cannot afford to ignore SRM - it will be the chief factor in determining an organisation's ability to deliver," says Hayley Walters, supply chain lead at Accenture in South Africa.
"Accenture experience has shown that, successfully harnessed, SRM can channel innovation into an organisation and help businesses move one step closer toward achieving high performance."
The findings of the study not only illustrate the cost benefits of SRM but indicate that in order to extract the best value, a company must use a holistic approach to align procurement capabilities, technologies and processes. SRM leaders are organisations that achieve more than 50% of their procurement benefits from post-contract award activities.
By analysing the activities adopted by SRM leaders, conclusions can be drawn as to how other companies might successfully implement SRM to reduce operational costs, impact the bottom line and, ultimately, achieve high performance.
Specific findings of the study include:
The path of partnership is never an easy one. Leaders that have embraced SRM from a more strategic and holistic standpoint, however, are clearly winning in the marketplace - and not purely through cost reductions. Companies can realise other benefits beyond savings, including reduced risk, increased speed-to-market and access to new technology and solutions.
*Accenture defines SRM as "the systematic management of supplier relationships to optimise the value delivered through the relationship over their life cycle".