The Supplier Information & Performance Dossier (part 4): Supplier Performance Management
In the post 1 and post 2 of the series we discussed why Supplier Management is gaining importance and the importance of Supplier Information Management. Post 3 was focused on the Best practices for Supplier Management and the technology enablers that can help us enforce the Industrial Best Practices. In this post we will elaborate on the Supplier Performance aspect.
Supplier Development is a bilateral effort by the buying as well as the supplying organizations in order to jointly improve the supplier’s performance and/or capabilities in areas such as cost, quality, delivery, turnaround time, technology, managerial capability and financial strength.
Supplier Performance Management is a business exercise performed to measure, analyze and manage the performance of the suppliers in an effort to reduce costs, mitigate risks, and drive continuous improvement for ensuring a sustainable supply chain.
Importance of Supplier Performance Management
Supplier performance management can help companies have better visibility into supplier deliverables. Scorecards can also help companies to develop their suppliers and help them overcome their weaknesses which would help both companies. To achieve this, organizations need to adopt a Supplier Management collaborative platform for defining key performance indicators (KPIs), capturing data inputs, setting stakeholder surveys and balanced supplier scorecards. Some of the benefits of using a Suppliers Performance Management System are:
1. Develop Strategic Relationships: Supplier Management enhances strategic supplier relationships and the enterprise’s ability to strategically plan for the longer term. Based on the scorecards, organizations may execute supplier development programs which can help the organization to improve supplier performance, product/service quality, reduce cost and attain higher value from the suppliers. Procurement can thus leverage and enhance strategic supplier relationships.
2. Supplier Benchmarking: Supplier Performance Management allows the organization to benchmark their suppliers against their industry peers, enabling the organization to make informed decisions. This also helps the organizations to identify areas where the company may want to support the supplier in order to achieve improvement over time.
3. Risk Reduction: Supplier Scorecards help to understand the suppliers’ capabilities and thus avoid costly and potentially devastating supply disruptions. The scorecards also capture performance trends of the various suppliers that may be mapped against the competitors and can also help analyze future risks!
In the next blog we will discuss in detail the Best Practices for Supplier Performance Management and the technology enablers that help implement the best practices. So Stay tuned…
For further reading, click on the download button below to access the whitepaper- Supplier Information and Performance Dossier.
