State of Flux: Suppliers Hold Key to CX in Manufacturing

Suppliers are responsible for delivering more than half of the customer experience, yet most organisations are failing to manage these critical relationships effectively.

This is a central finding in the 2025 Global Supplier Relationship Management (SRM) Research from State of Flux, which indicates procurement is moving from a focus on transactional cost-cutting to fostering long-term value and resilience.

The report, From Customer of Choice to Customer Delight, gathered the thoughts of hundreds of global procurement and supply chain professionals. The findings reveal a stark gap between the aspirations of businesses and their current capabilities.

While the impact of suppliers on business performance is increasing, only 6% of organisations have achieved a mature level of SRM capability. This shortfall could create inefficiency, risk and missed opportunities for businesses.

Alan Day, Chairman and Founder of State of Flux, explains: “Suppliers are now an extension of the customer experience. The organisations that recognise this are building supplier relationships that deliver trust, innovation and measurable business advantage.”

The strategic value of supplier partnerships

The State of Flux report suggests that supplier partnerships are now a direct influence on customer experience, not just a matter of cost or risk.

For manufacturers, this means the quality of raw materials, the reliability of component deliveries and the conduct of third-party logistics partners are all directly shaping the end-customer’s perception of the brand.

Case studies from companies including US Steel, Vodafone and Air Canada show how organisations can embed SRM across various functions to co-create value. They provide examples of how mature SRM can be more than a compliance exercise, becoming a vehicle for strategic alignment.

As the State of Flux report notes: "Suppliers often represent your business at the moment it matters most.”

George Booth, Chief Procurement Officer at Lloyds Banking Group, shares this perspective. Speaking at the research launch, he reminded procurement leaders: "Our brand reputation is often in the hands of our suppliers.”

George links supplier assurance and sustainability directly to brand protection, saying Lloyds Banking Group is committed to “working with our suppliers collaboratively on our common journey to net zero". 

Redefining resilience and performance

Supplier-led performance extends beyond customer-facing metrics. In many organisations, more than half of the workforce can be made up of supplier personnel. This means any issues with safety, ethics, or performance can quickly become visible to the customer.

For manufacturers, a failure in a supplier’s ethical standards or safety protocols can have immediate and damaging consequences for brand reputation.

Vodafone’s structured approach to SRM unfolds in three phases: developing SRM tools, piloting new ways of working and then rolling them out to strategic suppliers.

Vodafone's objective is to “ensure value negotiated prior to contract execution is maintained throughout the life of the contract...and allow extra value to be unlocked through closer collaboration with suppliers.”

The primary challenge for Vodafone is one of scale. However, early results are positive, with SRM “coordinating stakeholders across the business, aligning resources and exploring additional mutual value” with its pilot suppliers.

Priorities for procurement in 2025

The research puts forward three main priorities for procurement leaders to consider.

• First is to strengthen the foundations of SRM by building internal capability frameworks and governance.
• Second, leaders should reframe how they measure success, assessing what suppliers deliver for customers, not just for the procurement function.
• Lastly, businesses should embrace supplier-led innovation as a route to closing gaps in both customer experience and operational resilience.

This approach moves SRM from a cost-control function to a central component of enterprise value. The report is clear that procurement no longer simply negotiates contracts or chases savings; it now shapes customer outcomes, manages brand risk and secures business continuity.

In a market where traceability and transparency are increasingly important, strong supplier capability could offer a competitive edge. The message from respondents is consistent: “Suppliers now influence over half of the end-customer experience.”

Companies that treat their suppliers as strategic partners stand to build resilience, foster innovation and enhance their reputation.