Supplier performance has gone mainstream

Recently Joyce Herlihy of eVendorCheck and I gave a webinar, “Selecting the Right Suppliers”, for NIGP (Institute for Public Procurement). I asked a group of public procurement professionals in attendance whether their organizations had ever lost significant time or money from supplier under-performance or failure. The overwhelming majority of the over 100 people who voted in the poll said yes. Only one person voted no. This says to me that avoiding poor supplier performance and failure is more than “nice to have”. It’s critical.  And using software tools and business practices to avoid poor supplier performance is without a doubt essential. This isn’t to say, however, that all organizations have these tools in place. But most have some sort of basic tools or scorecards in place even if they aren’t totally satisfied with their ability to manage performance. There’s awareness. Supplier performance has gone mainstream.

Not too long ago, when I was an entrepreneur in the software business (Valuedge) with a “bleeding edge” supplier evaluation application, many companies would agree that it was very cool, nice to have, but not essential for them. Many could not understand the ROI. Or if they did, they could not convince their senior management, who was ever in search of the quick fix. Typically, only the early adopters were on it. And the early adopters understood that purchasing cannot live by slick-looking supplier scorecards alone. They actually have to take action to resolve the problems that the scorecards bring to light.

Times have changed. There are many, many SPM software solutions and far wider adoption of supplier performance management ranging from simple scorecards to feature and function-rich SPM software solutions. It’s a far more competitive software landscape for SPM than it was 10 years ago. I’m not implying that firms have SPM covered and are happily working with their suppliers on performance. As usual, software is still ahead of actual business practice. But adoption has increased materially as has awareness, at least in North America and Europe. In my experience, SPM business practice in China is still behind. And for those who would like a how-to guide for the business processes and practices, my book, Supplier Evaluation and Performance Excellence, is still selling well and helping many practitioners address this topic.

Hoping nothing bad will happen to or with suppliers is not a reliable strategy. The word has gotten out. Poor performing (and failing) suppliers create undue risk, unhappy customers, destroy market competitiveness, and cost a lot of money.

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