Are suppliers not doing what you expect them to do or is poor supplier performance driving you crazy? Then you are not alone.
The key to managing supplier performance is the quality of the relationship. Often referred to as understanding the significance of the value stream, this requires both sides to be actively involved in keeping the relationship current and communication lines open. A supplier relationship should not be one of power and control, but one of mutual respect. Fortunately most suppliers genuinely want to do a good job, so getting to know your suppliers and involving them in regards to the best way to behave towards your business is easier than we often expect.
A relationship breakdown will, however, most certainly result where there is a lack of clarity and alignment of your respective expectations for performance. Operationally this means don’t underestimate the value of documenting your respective expectations and dedicating regular review opportunities, as without this, at the very least there will inevitably be an increase in the risk of failure and it will certainly reduce the chances of innovation, or the benefits of a proactive and mutually beneficial supplier to customer relationship.
Trends and developments in purchasing and supply management suggest that implementing a supplier performance management and rating program is the most effective way to manage supplier performance, however many procurement managers say they have thought about it but have had difficulty getting started or getting the necessary organisational support.
Our tips when considering effective supplier performance management are: