Many people struggle with getting senior management support for supplier performance management initiatives. And, according to the editor-in-chief of Supply Chain Digest in his July 2nd editorial, many people don’t even know what senior management support means. Most know that you’re supposed to need it or you might not get very far with implementing supply chain management or procurement initiatives. If management is not convinced that, for example, supplier evaluation is more than just goodness and “the right thing to do”, then they may not give you resources to make it happen.
So how do you go about getting that support? The approach may vary, depending on the level of awareness about the importance of supply management and overall support for it. But one approach that usually gets senior management attention is financial — cost savings and avoidance as well as revenue enhancement. Here are a few ideas for presenting the business case, which, by the way, are described in more detail in my book, Supplier Evaluation and Performance Excellence:
- Quantify the elements of the cost of poor supplier quality and performance failure in your organization.
- Read research reports (for example, such as those from Aberdeen Group and Accenture) that describe and quantify the benefits, cost savings, value add, and ROI of evaluating, building relationships with and developing suppliers and use the findings to bolster your arguments
- Examine some of your big internal problems, such as, for example, customer complaints and quality rejects, and analyze what part of those costs is caused by supplier issues and the value or cost savings from fixing them.
- Identify one or two supplier problems that you are currently aware of and calculate the cost savings to both your firm and to the supplier from fixing the problem
- Demonstrate the risks to the company of not understanding and improving supplier performance or of not knowing whether the company has the right suppliers such as increased risk, increased costs, and potential impacts on customers.
To get support, make the business case as real and quantified as possible. Show not only cost savings and risk avoidance, but also the value that high-performing suppliers can add.