{"id":2635,"date":"2009-04-01T14:07:00","date_gmt":"2009-04-01T14:07:00","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2009\/04\/01\/whitepaper-wednesday-supplier-performance-management\/"},"modified":"2021-08-12T08:44:37","modified_gmt":"2021-08-12T12:44:37","slug":"supplier-performance-management","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/supplier-performance-management\/","title":{"rendered":"Supplier Performance Management"},"content":{"rendered":"

This is a review of a white paper entitled \u201cEffective Supplier Performance Management: Maximize your Profitability and Minimize Risks\u201d from Ariba.<\/p>\n

The white paper starts by discussing some of the key aspects of supplier performance management (SPM), with a lot of similarity to the concepts taught in our free online mini-course \u201cManaging Supplier Performance<\/a>\u201d and our article \u201cManaging Supplier Relationships<\/a>.\u201d The portion of the white paper that I found most unique and interesting was Ariba\u2019s \u201c7 Foundational Principles of Supplier Performance Management.\u201d Here is a summary of those:<\/p>\n

    \n
  1. Know your end game, then set metrics for only those elements that drive you
    \ntoward the end game.<\/li>\n
  2. Decide with metrics\u2026the facts rule. What I think this white paper is getting at here is saying to internal customers (who are often defenders of the incumbent \u2013 and, usually, expensive \u2013 suppliers): \u201cI understand that you feel that this supplier is good. Let\u2019s work together to find out exactly how good this supplier is from an objective perspective.\u201d<\/li>\n
  3. Hold them to the numbers, clarify consequences, and follow through. Basically, this piece says that consequences for bad performance are necessary, but there will be less friction and, ideally, better performance if everyone knows what to expect upfront.<\/li>\n
  4. Work with (not on) suppliers. Suggesting that procurement professionals ask suppliers to rate themselves (as a complement to being rated by you), this white paper stresses that supplier relationships are a collaboration of peers at times, not just a review between a superior and a subordinate.<\/li>\n
  5. Assign SPM owners. Effective supplier performance management requires personal dedication to the process as well as personal accountability.<\/li>\n
  6. Leverage continuous improvement methodologies, modify metrics over time. Nothing stays the same forever. Neither should your supplier performance management program.<\/li>\n
  7. Automate processes, including data collection, reporting, and analysis. This is pretty self-explanatory.<\/li>\n<\/ol>\n

    Obviously, the white paper has much more detail than I can review here, it\u2019s very well written and relevant, and it\u2019s only five pages, so I recommend that you download your own copy from Ariba\u2019s Web site (registration is required). Be sure to save a copy \u2013 I think this is one of those rare white papers that you may find yourself referencing now and then over the years if you\u2019re committed to an effective supplier performance management program.<\/p>\n

    Become a member of one of the world\u2019s largest procurement associations today.<\/a><\/p>\n

     <\/p>\n

    Recommended Reading<\/strong><\/p>\n