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Reaping Benefits from Supplier Performance Management

Recently I attended one seminar on supplier performance management (SPM) wherein the audience seemed to have mix reactions on the topic have penned down some of my  thoughts on the same. With inorganic growth in many organizations tracking supplier's performance at global scale is becoming a new challenge.
Global scale also leads to compounding of supply risk and performance issues namely -
1) Rapid inception of new supplier demands and expectations
2) Credit situation
3) Changing labour rates
4) Rising demands and government expectations
5) Working capital challenges and amidst variable demand
With these issues on hand, is SPM a full or a partial antidote?  Dealing in global environments with SMB suppliers, available credit and supply risk often comes up short. Accuracy is as a major concern and so is highly available coverage. By entering SPM internal information vs third party data available gives a greater control as both qualitative and quantitative metrics and risk indicators can prove useful, but challenge lies in defining and managing such programs to improve visibility.
We also need to check as to how we can meet these expectations with real time SPM. The primary objectives while encouraging such programs include -
1) Getting better insights of supplier performance
2) Building relationships to seek better opportunities
3) Identifying risks with accurate score boards
4) Preventing and mitigating supply risks
5) Investigating the accurate criteria for supplier On Boarding
6) Settings strategies for disengagement with low performers and high risk suppliers
7) Identifying suppliers continuous business improving opportunities
8) Working on development projects with suppliers
 Below mentioned are some of the ways that   can help explore real time SPM capabilities:-
1) Supplier survey and assessment development and deployment - Supplier scorecard should be developed with corporate goals in mind.
2) Probing the evaluations results - The overall SPM strategy should make sure it is aligned with corporate objectives so they enhance them not conflict with them
3) Conducting Stakeholder satisfaction results - It should also create a rollout plan to both the stakeholder and supplier communities.
4) Collecting information of suppliers performance from various mediums - The team must identify how it will collect, monitor and measure performance.
5) Checking the trend analysis - Performance data must be collected and becomes valuable over time. As a business grows and changes, the goals, strategies and metrics must be recalibrated so that everything is aligned
6) Checking the contracts and SLA and delivery times - Teams should establish time period associated with data collection, for example, quarterly.
7) Continuous tracking of corrective plans and improvement plans - Companies must act on the performance data collected so they can influence supplier behaviour.
8) Tracking audit reports or corrective evaluations - Once collected the data should be reviewed against criteria and shared with suppliers and stakeholders
 Finally success factors which can ensure success of SPM include -
1)  Ownership from management - Exhibit to senior management not only cost savings and risk avoidance, but also the value that high-performing suppliers can bring.
2) Setting quality standard with business process regrouping - SPM is a business process, not a scorecard. SPM requires a good, closed-loop business process in place in order to add value and to succeed.
3) Clear Communications - There should be transparency in communication between the suppliers and with the stakeholders in the firm. Communication on performance expectations with suppliers will help the suppliers and give them space for improvement which will raise SPM visibility and broadcast success.
4) Concrete Actions- SPM without actions, improvements, and follow-up is futile. Go beyond collecting data for the sake of data. Deliver improved supplier performance, reduced costs and increased supplier value.
5)  Measurable results- An SPM system is about results. When properly deployed and fully adopted, SPM can create both top line and bottom line value. Capture the value and communicate it to management.
 With these and an organized program implementation of SPM many can start reaping the benefits of SPM.

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