A substantial reliance on suppliers coupled with diverse product ranges makes Supplier Performance Management (or SPM for short) a complex process to say the least.
However, despite these challenges, successfully managing your suppliers’ performance is crucial if you want to:
- Reduce risk
- Reduce the administrative burden of your suppliers
- Maintain product quality
- Reduce product development delays
- Increase product innovation
In this blog series I will cover three simple ways successful Supplier Engagement can help improve your Supplier Performance Management by facilitating communication, support and transparency within your supply chain:
- Strong visual management
- Supplier self-help
- Automated communication campaigns
#1 Strong visual management
As a retailer, there is always a need for continuous assessment to evaluate and ensure that suppliers perform to the level of performance you, the retailer require. This is best done by focusing on a few Key Performance Indicators (KPI).
Introducing supplier visual management!
Visual management is a technique designed to help anyone entering the work place, even those unfamiliar with the detail of the processes, understand what is going on and, more importantly, see what is under control and what isn't.
Most supplier-facing retail professionals that I have talked to about Supplier Performance Management will already have some basic processes in place to gather this information. Invariably this involves compiling a number of Excel spreadsheets before then taking on the tedious and often monotonous task of chasing each overdue supplier - just thinking about this gives me a headache. There is then the challenge of how best to share this performance with each supplier … and by the time the process is completed the information is often out of date deeming the entire process a potential waste of time.
This is where visual management really comes into its own!
What if you could have a clear, dynamic KPI ‘Dashboard’ that could transform how you work together with your Suppliers; to drive innovation and reduce risk.
This is Visual Management. Clear performance against the chosen KPI, normally with a Red/Amber/Green status to show where improvement or action is needed and recognises those who are compliant.
Instead of time spent fire-fighting, you and your Suppliers can maximise productivity by identifying the performance gaps and putting collective effort into the right places. Ideally this can progress to spotting a KPI trending the wrong way and taking pre-emptive corrective actions to avoid potential future issues.
Imagine the impact to performance management in your organisation if you could forewarn your supply base of potential costly risks. Or, if your review meetings could change to more forward planning meetings. The opportunities are endless.
KPIs + motivation & understanding = engagement
If you’ve read Five Reasons Your Business Should Adopt Supplier Self-Help you’ll recognise that Supplier Engagement is about motivation and understanding. Appropriate visual management is a valuable part of this because it makes objectives clear and adds transparency to the progress suppliers are making towards KPI.
It is also then about giving suppliers the tools to improve against these KPIs: “How do I improve this score?” More on that in my next blog post.