Companies today face harsh economic conditions, increasing competition, growing market demands and pressure to expand on a global scale. Complex environments and a surge in regulatory scrutiny mean that delivering quality products is crucial for success. More and more, suppliers are asked to contribute materials and services to manage a growing number of processes and functions that were once controlled internally. Understanding the strengths and shortcomings of your suppliers helps you solve your company’s competitive challenges. Having an effective supplier performance management (SPM) strategy offsets risk, improves overall product quality and keeps costs under control.
Supplier performance measurement (SPM) is measuring, analyzing and managing supplier performance to reduce costs, mitigate risk and improve value and operations. Most companies have restricted performance measurement programs based on one or more of three criteria:
To maximize SPM, companies need to evolve beyond reacting and instead focus on preventing disruptions and increasing the level and value of supplier performance through linking their operational value streams and collaboration.
As all companies are painfully aware, poor supplier performance and supply disruptions potentially create:
SPM, which is effective for restructuring procurement and supplier management, is a largely untapped business opportunity. The benefits are:
1. Reduced supply chain risk
SPM provides in-depth knowledge of potential supplier risk so you can put measures in place to reduce or eliminate it.
2. Cost savings
SPM enables you to track supplier performance so you can make informed decisions about where to direct your spend.
3. Collaborative supplier innovation
SPM enables you to collect data and create value, reducing costs and time, and paving the way to meaningful and mutually beneficial relationships.
4. Improved internal processes
SPM uses cloud-based technology to track performance and analyse results, combined with supplier registration, onboarding and qualification management.
SPM is a valuable addition to any procurement function, improving quality, on-time delivery, costs, compliance, lead times and overall responsiveness. So what are you waiting for?
- the suppliers comprise the largest portion of total spending;
- the critical/strategic nature of the product supplied;
- the critical/strategic nature of the supply relationship.
To maximize SPM, companies need to evolve beyond reacting and instead focus on preventing disruptions and increasing the level and value of supplier performance through linking their operational value streams and collaboration.
As all companies are painfully aware, poor supplier performance and supply disruptions potentially create:
- operational disruption
- lost customers or damaged customer relations
- lost sales and margins
- poor product quality and/or rework
- increased lead times and cycle times.
SPM, which is effective for restructuring procurement and supplier management, is a largely untapped business opportunity. The benefits are:
1. Reduced supply chain risk
SPM provides in-depth knowledge of potential supplier risk so you can put measures in place to reduce or eliminate it.
2. Cost savings
SPM enables you to track supplier performance so you can make informed decisions about where to direct your spend.
3. Collaborative supplier innovation
SPM enables you to collect data and create value, reducing costs and time, and paving the way to meaningful and mutually beneficial relationships.
4. Improved internal processes
SPM uses cloud-based technology to track performance and analyse results, combined with supplier registration, onboarding and qualification management.
SPM is a valuable addition to any procurement function, improving quality, on-time delivery, costs, compliance, lead times and overall responsiveness. So what are you waiting for?