At the end of the year, and especially at the end of a decade, many top ten lists are popping up. So I’m joining in this list-making with the top ten reasons why firms should implement supplier performance management (SPM).
- Find out how well suppliers are really performing
- Improve supplier performance such as quality, responsiveness, customer satisfaction and delivery
- Reduce the cost and operational impacts of poor supplier performance
- Derive value from suppliers beyond lower prices, such as collaborative product development and business development opportunities
- Better understand the supply base and who the most critical and strategic suppliers are
- Find out current or potentially risky suppliers
- Uncover and reduce supplier-induced problems (and cost drivers) such as customer complaints, quality problems and warranty returns
- Gather the information that will help you set criteria for new supplier on-boarding and approved supplier lists
- Find and disengage with low-performing suppliers
- Identify specific, value-added supplier performance improvement opportunities
Supplier performance management is more than the quest for the perfect scorecard. It is a business process for measuring, analyzing and monitoring supplier performance and suppliers’ business processes and practices in order to develop productive customer-supplier relationships and to reduce costs, mitigate risk, drive continuous improvement and leverage supplier value. While firms can certainly derive “quick hits” from SPM, it yields the most value and impact when viewed as a premeditated, ongoing business process with multi-function participation and ongoing care, feeding and continuous improvement.
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