| Superior supplier performance is not a one-time | | | | track whether or not these projects will deliver on |
| event. It should be a continuous process of | | | | time and realise the benefits expected. |
| improvement. The starting point is to understand | | | | 5. Measures linked to people. All performance |
| current performance and where it can be improved. | | | | measures need to be owned by someone who is |
| Here are ten tips for managing supplier performance. | | | | responsible for achieving the targets you have set. |
| 1. Use measures that are appropriate to the type of | | | | Allocating accountability and then measuring progress |
| relationship. Clarify your expectations and priorities for | | | | is a key to driving improvement. |
| each class of supplier (based on spend value and | | | | 6. Assign data collection responsibilities. Not all of the |
| supply risk or complexity) in ways that are | | | | data needed for supplier management indicators will |
| meaningful. For example, suppliers of routine products | | | | be readily available from systems. In this case, |
| (such as office supplies) may be measured on price, | | | | someone needs to be given the responsibility for |
| quality and delivery lead-time. On the other hand, | | | | collecting this data accurately and in a timely manner. |
| strategic suppliers might be measured on total cost | | | | 7. Feedback performance measures quickly. The |
| of ownership, quality assurance and process cycle | | | | shorter the feedback loop between an action and |
| times. | | | | the measurement of the result, the more likely it is |
| 2. Use measures that are linked to objectives. | | | | that individuals will learn from their actions and take |
| Objectives are the specific targets you set in order | | | | corrective action for next time. Knowing what went |
| to meet your goals. For example, an objective of | | | | wrong a month or more ago does not help people to |
| reducing a purchase price by 10% in the next year | | | | find underlying causes of poor performance. |
| can be used to achieve a goal of reducing your | | | | 8. Make your performance systems accessible. Speed |
| purchasing costs. You need supplier measures that | | | | of feedback is essential. Using web-based |
| monitor these objectives. | | | | performance systems, for example, lets people |
| 3. Use measures that are linked to key processes. A | | | | access performance information as and when they |
| process is a set of tasks and decisions that are | | | | need it. |
| needed in order to carry out a procurement activity | | | | 9. Use dashboards. These are a great way to |
| such as "paying a supplier". Performance measures | | | | summarise performance information and relate them |
| should tell you when your key processes are | | | | to target levels. Colour coding performance (green |
| under-performing as it may be an indication that they | | | | for good, red for bad) and dials or a scale are great |
| are broken. | | | | ways of allowing people to see at a glance whether |
| 4. Use measures that are linked to improvements. | | | | or not they are on track. |
| Continuous improvement is achieved through an | | | | 10. Keep it simple. Complicated systems will fail from |
| on-going programme of improvement projects many | | | | lack of use and from difficulties in maintaining the |
| of which will involve suppliers. Use measures that | | | | data needed. So simplify at all times. |