Why should you do supplier performance management? Isn't just scorecards?
Today’s eSourcing Wiki-Wednesday topic is Supplier Performance Management.
In spirit of partnership, suppliers and buyers can benefit tremendously from Supplier Performance Management. In looking deeper, I found this article from Cap Gemini.
One area mentioned in the article and that I have experience is that different business units within the same organization handle Supplier Performance management quite differently. They have a differing variety of data points, processes and frequency of reviewing the supplier. It causes confusion and extra complexity across business units and the technology platforms. Not a surprise that the recommendation is to standardize across an entire organization to gain visibility and consistency in all business verticals.
Another topic discussed in the article is calculating the value of SPM. Why spend the time and resources to do this activity anyway? We don't want to do anything unless there is value for it. Here is a quote from Cap Gemini:
SPM remains a key enabler to develop both suppliers and the internal organization and thereby providing value through:
- Increased supply quality
- Reduced cost
- Reduced supply risk"
What do you have as a justification for Supplier Performance? Did you have any trouble calculating the ROI and justifying the value?