Here are some powerful tips to living simply. Stay tuned for Part II of this blog where we will move on from Supplier Performance to Supplier Risks and how they play into the overall health of your organization’s supply chain.Simple living is all about cutting back your possessions and living a less hectic lifestyle. Supplier Innovation isn’t one of the low hanging fruits when it comes to building a regular supplier performance management practice, but it is certainly worth starting discussions within your organization around tracking it. If an existing supplier partners with your organization as you expand into a new geography, your benefits from one supplier have now multiplied several times over and your Procurement team has the same points of contact to deal with, thereby streamlining process efficiencies despite the added complexities. Parallely, check if they provide regular inputs on how they could collaborate with your organization to reduce costs.Īnother indicator of a strategic supplier who’s here to stay is if they pass the ‘expansion test’. Check supplier’s revenue and cash flows for their financial health. You could use something like a Stage Gate model to evaluate new product introductions. Recommended only for strategic suppliers, measuring supplier value through the kind of innovation they do gives a good justification for whether they should continue enjoying their privileges or it’s time to move on to better options. Read this White Paper for iPerform data benchmarks and best practices for creating supplier scorecards. Zycus iPerform for example, tracks supplier KPIs while enabling Procurement to collaborate on development programs and setting up corrective actions in real time. This means that you don’t just keep conveying KPI results to suppliers but also have actionable evidence for whether they improve or deteriorate over time. Maintaining a central repository of this data – one that several team members can access anytime they want – is necessary to ensure you get time-series analyses on a particular supplier or supplier category. Prioritize the ones that matter to your business with the highest level of criticality first and then move on to the more ‘good-to-have’ ones. KISS – Keep it Simple Stupidĭon’t go measuring 15-20 KPIs for every supplier just because a metric exists for every use case you can think of.
Written action items and following up based on pre-determined timelines can motivate suppliers to perform better. Would you want to spend the same amount of time on a strategic supplier as you spend on one of your many office supplies suppliers when you could just measure the latter’s on time delivery rate and price and just be done with it?įor suppliers contributing to your highest spend percentages, set time and plan ahead for regular performance reviews. Focusing on just 20% of your suppliers will therefore lead to performance enhancements proportionate to 80% of your indirect spend. Do a quick analysis on your spends if you don’t believe this. More often than not, about 20% of your suppliers constitute about 80% of your indirect spends. The 80:20 rule or the ‘Pareto Principle’ applies well in this context. A typical mid-enterprise organization has hundreds of active and past suppliers in its database. Treating all suppliers the same is one of the most inefficiency-inducing practices a Procurement team could do. Learn More: Supplier Performance Evaluation – A Quick Checklist Segment Suppliers Because One Size Doesn’t Fit All Read this White Paper to get a supplier evaluation checklist as you tackle various quantitative and qualitative performance measures.
#Keep it simple quotes software
Most of these would already be a part of your ERP or Procure-to-Pay software and it’s easy to create scorecards out of multiple factors. To quote Galileo, “Measure what can be measured and make measurable what cannot be.” Supplier Performance measures can be both qualitative and quantitative. Source-to-Pay Digitization Diagnostic Supplier Performance – What to Measure?
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