Improving supplier performance involves change management. And change isn’t just something only suppliers have to contend with. To put a successful supplier performance management process in place, most customer companies will need to undergo many changes, probably more than they had ever imagined. Some customers have the mentality that suppliers need to improve, so they’re the ones that need to change. But customer firms should ask themselves: what their role in enabling the change is going to be, whether they are part of the solution or part of supplier performance problems, and whether they have the people, processes and technology to make improvements happen.
What changes typically need to occur in the customer firm? Here are a few:
1. Senior management needs to understand the benefits and ROI of supplier performance management (SPM), buy into the process and truly support it.
2. A good SPM business process must be designed, developed and put in place.
3. A new business process requires resources and support. Job functions may change. New skills may be needed. And technological support, which in turn requires change and resources, is often involved.
4. Functional areas outside of procurement and supplier quality need to understand the benefits of SPM, buy in and participate. Procurement needs to gain the mindshare and often some time commitment of other functions impacted by supplier performance in order to design, develop and operate a new process.
5. Communications need to be defined and developed within the procurement or supplier quality organization, within the company, with suppliers and with any other impacted stakeholders — before, during, and after implementing SPM. Some of these channels and types of communications are new to all and require change.
6. The customer firm may identify changes and improvements that need to be made to some of its own business process as a result of supplier performance improvement opportunities that are uncovered during SPM. Customer processes typically contain some roadblocks to supplier performance that often come to light as suppliers address improvements.
Effective supplier performance management, like any high-impact business process, requires change management. Once firms realize that there’s more to SPM than creating a slick supplier scorecard, they can be more prepared to address the changes successfully.
-Sherry R. Gordon