9 Benefits of Supplier Performance Management & Tips to Get Started

9 Supplier Performance Management Benefits

  1. Enhanced Supply Chain Visibility — Better supply chain visibility brings you closer to the pulse of your supply chain, giving you a better means to forecast and avoid costly supply chain disruptions.
  2. Supplier Accountability — Supplier Performance Management systematically and implicitly expresses expectations and KPI acceptance criteria to your suppliers. This in turn allows the supplier to take accountability for their own performance and activities as partnerships are entered with a transparent framework for ideal performance, from the start.
  3. Supplier Led (Enabled) Innovation — As stated in the first line of this post, 65% of innovations are supplier & partner-led (ISM). Communicating the importance of performance and innovation ambitions to partners welcomes them to more openly share their unique insights, industry-specific competency, and capacity for innovation. Remember, your suppliers are experts in their field; that’s why you started working with them in the first place. An SPM process will help you systematically listen to, and absorb, what they have to say!
  4. Quality Performance (Product & Services) — Follow-up on product & service quality is a straightforward win from SPM. Systematic measurement, reporting, and analysis of supplier quality (deviations, complaints, claims, project quality, etc.) will help you to cut out suppliers who aren’t making the cut and bring better quality products & services to your end customers.
  5. Easy Follow-up on SLAs — A service-level agreement (SLA) defines the level of service you expect from a vendor, laying out the metrics by which service is measured, as well as remedies or penalties should agreed-on service levels not be achieved (CIO.com). SPM aids definition, measurement, follow up and actions for agreed-upon SLAs. Contract compliance can be challenging, but solutions for SPM make it cut & dry.
  6. Increase Buyer-Supplier Collaboration — SPM software provides a common platform to enhance buyer-supplier relationships and collaboration. As said before, simple things like beginning a supplier relationship with clear expectations can prove to build trust, respect and mutual goals. Learn more about supplier relations here
  7. Spot Best & Worst Suppliers Faster — Utilizing technology to measure and analyze supplier performance KPIs will provide your team with a better means for data visualization and therefore a better means to spot best & worst performing suppliers. Do you know who your best supplier is? Read more on that in this article.
  8. Make Sourcing & Procurement Decisions more Data-Driven — Make systematic & data-driven decisions a priority. SPM will give you the insights you need to make more data-driven decisions, but if you choose to act upon them, it will still require the EI (emotional intelligence) & HI (human intelligence) that makes you a talented procurement professional in the first place.
  9. Align Team on Business Goals — Sometimes broader business initiatives can feel very distant. Aligning within your procurement team on a supplier performance management framework, system & process will allow your team to have a more holistic understanding of how greatly supplier performance impacts the broader business (such as how performance creates an opportunity for savings, innovation, brand-value creation, competitive edge and more). Change can be overwhelming. Sometimes, that feeling can become the barrier to jumpstart change at all. But, in order to apply supplier performance management tools and adopt a framework that will make an impact in your organization, change is inevitable. That’s why our team at Kodiak Hub has laid out these tips below on how to get started.

7 Quick Tips To Get Started With Supplier Performance Management Solutions

Align on KPIs

Take a broader Stakeholder Perspective

Typify/Segment the Supplier Base

Don’t forget about Governance and Risk Parameters

Know what’s going on

Locate the right Data

Adopt a Rating Methodology

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