Understanding the Value of Qualitative and Quantitative Supplier Performance Management Inputs

Just as many of us recently got through the potentially challenging spot of taking feedback on how we cooked the turkey from our many guests, gauging, measuring and understanding qualitative supplier performance management feedback that comes from non-system sources may often feel as unscientific as business gets. But it doesn't have to be this way. In the SPM Whitepaper that I referenced just recently, Sherry Gordon, a true expert on the subject, does a succinct and helpful job explaining how we can best incorporate qualitative components in our supplier performance management programs. For Sherry, the qualitative can be as integral a component as the quantitative, provided it's gathered, measured and used correctly and in context.

Sherry frames the need for qualitative information by noting, "quantitative information can give a false sense of security, as it can be subject to data integrity problems." Fortunately, "qualitative [SPM] information about supplier performance is successfully used by many companies [and] the reliability of qualitative information can be verified during customer-supplier feedback meetings." But what are the best ways of incorporating and leveraging qualitative details?

Companies can express qualitative metrics in KPIs (or KPMs -- key performance metrics, to be specific), Sherry suggests. "A supplier scorecard can consist of KPMs at the top level or groups of KPMs. Sometimes the top level elements on a scorecard are calculated from several KPMs and rolled up into an overall score in areas such as quality, delivery and responsiveness." It's possible to gather these KPMs in a structured manner through survey questions, which also allow the opportunity for unstructured feedback as well as formal, subjective ratings. Yet when it comes to the scorecards and KPMs themselves, "less is more," Sherry cautions, as "more KPMs on a scorecard increase complexity and may require additional resources to derive and manage."

Before getting started on a new or expanding SPM journey, I strongly recommend downloading the free whitepaper (linked above), and if your curiosity is piqued, then read Sherry's book on the subject: Supplier Evaluation & Performance Excellence. There's a growing group of supplier performance and vendor management professionals I talk to who treat Sherry's repitoire as their official reference guide to creating, implementing and improving SPM programs.

Jason Busch

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