Manage supplier performance for successful contracts

Your organization may already be engaged in supplier management, retaining contact and financial information on these suppliers, likely in a financial system or ERP platform. Adding supplier performance management, as a piece of effective supplier management, can be a powerful tool for any organization.

 

  1. Who

    First, determine who needs to be involved in the creation of a supplier performance management policy and process. Who benefits from the information gathered by the program? Who will maintain it? Who are the key stakeholders? Once you determine all the people involved, communication and effectiveness of the program will be more successful.

  2. What

    What is your goal of issuing supplier performance evaluations to your organization and suppliers? What type of information are you looking to capture? For example, a service company may be ranked on accuracy, quality, and support, while a construction company may be ranked on timeliness, milestones, and budget. Determine what information will be valuable to your stakeholders, what information your suppliers will have access to, and what the remediation/appeal process will be.

  3. Where

    Where will information be stored, and where is it coming from? If your organization is completing paper evaluations, these might be scanned to a server or stored in a filing cabinet. Where am I giving suppliers information about this program, and access to their performance reviews? For example, within bids&tenders, supplier performance surveys can be completed entirely online and stored within the platform. Suppliers can have access to their completed evaluations, with information determined by the buyer organization, through their own platforms as well.

  4. When

    Determine when evaluations are needed – at specified intervals, at certain points in projects, etc. – and how long people have to complete them. If suppliers are seeing the evaluations, when would you like suppliers to respond by? If suppliers don’t respond in that timeframe, what is the process? When will internal and external stakeholders receive reminders and follow-up for incomplete or unacknowledged evaluations?

  5. Why

    Supplier performance information needs to be captured for a number of reasons. To mitigate risk, to build up evaluation and remediation processes, to eliminate pain points in future projects and RFPs, to help improve our processes and supplier selection going forward, and to build up more meaningful and collaborative relationships with suppliers. In the worst-case scenario, a well-documented supplier performance management program can also provide evidence if needed for contract disputes and litigation.