Some things are too big to ignore. Ignoring the potential to capture upward of 25% in value generation from non-contracted supplier engagement is a serious oversight no business can afford.

Whilst it’s true that SRM was often overlooked by the relative ease of contract management, things are clearly changing. The relationship (the operational non-contracted bit!) is no longer simply a bonus area to delve into. It’s now moreover a source of critical, hard-coded value. For clarification, what do we mean by that operational non-contracted bit? Well we are quite literally pointing out that as speculative human beings, we don’t live and function inside the pages of a legally drafted contract. We function in the real-world, in the non-contracted operational ether – where things often don’t go by page, schedule, or clause.

Natural attrition means regression

Fact is, contracts and their value naturally decrease, and recession or otherwise, companies have billions locked into rigid contracts. Unless they’re growing, natural depreciation and attrition means they’re regressing. Whilst at the same time, consequently, delivering against key value targets means more than ever, that customers and suppliers need to increasingly collaborate, not just to innovate, but to survive.  With growing emphasis now on top-line exploration to secure critical value, there’s never been a more important time to focus on creating meaningful, impactful relationships.

This shift isn’t about abandoning contracts, but about recognising the increasing limitations of contracts; whilst also accepting that the layer of non-obligated engagement that extracts non-contracted value is a key component of long-term planning, and ultimately a company’s longevity.

This shift is pivotal not because it abandons the contract’s foundation but because it complements it by addressing its limitations. For example, 92% of businesses still lack close relationships with their suppliers, which highlights the untapped potential in leveraging these relationships​. Furthermore, traditional procurement approaches often result in up to a third of negotiated value being lost due to poor relationship management​. By fostering non-obligated engagement and extracting value beyond the contract, organisations can improve resilience and operational efficiency. Digitally-enabled SRM can also unlock incremental savings of 3-10% annually through innovations in relationship-driven technology

How far ahead does your company plan?

Long-term planning typically covers a period of 3 to 5 years, (in some cases, longer, up to 10 years). These plans focus on the company’s vision, strategic goals, new partnerships, market expansion, new product development, and significant capital investments. Long-term plans are often revised as market conditions change.

At Suppeco we call non contracted operations the Digital Relationship Layer. That’s because it’s literally a digitally transformed operational environment. If you’ve looked at the complexity of today’s nonstop supply chain operations, you’ll know that managing all those parts and players dynamically using older static methods and tools, spreadsheets and PowerPoints, is quite frankly a waste of time. Take a closer look – what exactly is the relationship layer? You can find lots more on that here.

With this, Suppeco transforms higher engagement into a no-nonsense asset. By diving deep into the granularity and nuance of each relationship, companies can uncover opportunities to improve, to innovate, to manage and mitigate, to become co-resilient, and to harness efficiency previously missed by the limitations of traditional SRM – which to be candid had very little to do with relationships in any case.

If you’re ready to explore and find out more about the Suppeco digital relationship layer, contact us now to arrange a personalised demo.