Why is so much time invested in selecting the correct supplier and so little in ensuring that the supplier meets and exceeds performance?
Have we any idea how our suppliers are performing right now?
Sadly the answer to this question is usually no.
In many situations supplier performance is measured either by the existing problems with a supplier or based on out of date information. Furthermore this static information is often decentralised meaning reporting and distribution is costly in terms of time and resource. Especially if a supplier is providing a service or product across a range of locations, projects and business units.
Supplier Chosen, Contract Awarded & then what?
Across all industries a great deal of time is invested in ensuring the correct supplier is chosen to deliver a product or service. This supplier registration and qualification process is in place to ensure that the maximum value can be delivered from the right supplier. However for many, once a supplier begins to work on a project, there is zero visibility on how they are performing.
How can it be that so much time is invested in choosing the correct supplier and so little in ensuring that the supplier meets and exceeds performance? Who is responsible for ensuring the supplier delivers on all the value promised? Failure to implement an SPM process in many ways negates the value of a supplier qualification and awarding process.
Performance Creep Over Time
Research indicates that failure to engage with a supplier once a contract begins will see the initial savings identified at sourcing start to disappear.
Without rigorous continuous performance management 75% of sourcing savings can disappear after 18 months.
In essence, failure to implement a proactive process around performance metrics encourages a `benefits creep` over the lifetime of the contract.
There are a number of benefits to engaging suppliers at the start of a contract;
- Set expectations for the lifetime of the contract.
- Establish a measurement process to drive continuous improvement and two way communication between buyer and seller.
- Setting performance metrics and targets incentives the supplier to meet and exceed performance goals. This in turn can lead to increased supplier prestige and opportunities for future work.
- Performance can be tracked and monitored for the entirety of the contract and trended over time. This historic performance data can then be used to make more informed buying decisions in the future.
- Getting early buy-in improves supplier relationships.
How BiznetP6 can help.
- Performance Reports and Dashboards provide real time updates on supplier performance.
- Cloud Based- performance reports and dashboards can be viewed in real time by all stakeholders from anywhere in the world.
- Supplier Access- suppliers can access their own performance reports and implement corrective actions to deal with poor performance.
- Suppliers can be quickly registered on the system once work begins.
- Fast Implementation- electronic scorecards and surveys can be set up and issued with a quick turnaround time.
- Automation of data collection and reporting.
- Secure database of supplier data meaning performance history can be tracked and compared.
- Collect data based on variable factors such as contract ID, geographic location and directly compare performance.
Get in touch today and learn more about how Biznet can help your organisation improve supplier visibility.