In the first post of this series, I described Biznet's approach and differentiation -- along with other more advanced SPM providers -- in the supplier performance management sector as "fractal." In other words, more advanced SPM providers do what other vendors do, but on a level that takes it down a notch (or more), for companies that really want to make an effort to invest in SPM. Yet providers like Biznet only really begin to look different from other SPM modules when it comes to the reporting and overall management of SPM efforts. For data entry, the process Biznet users follow is quite similar to one that anyone going through a scorecarding effort would deploy (albeit with greater granularity and flexibility). They start with scorecard building, time or event driven data collection settings and a dynamic approvals process built on a user-defined organizational hierarchy. Users then define surveys and how the system will pre-populate data from both scorecards and external data sources.
Where Biznet begins to really separate itself out from the SPM pack is in the reporting area. Here Biznet provides what they describe as a dynamic report builder that includes the ability to group and observe data and trending over time. There's also a click-to-export to PowerPoint button that makes it a snap to go from web application to corporate presentation standard (users can also easily export data to Excel). Underlying the report builder is a set of capabilities that allow for the fractal drilling up and, of course, drilling down of data based any virtually any combination of factors, hierarchies, etc. Moreover, users can view data in truly rich graphical interfaces based on geographic performance maps, charts and sliders, trending graphics, matrices/bubble charts, heat maps, etc.
Yet without underlying KPIs, all of this SPM eye candy would be about as valuable as all the other supplier management technology out there that sits unused -- or underutilized. KPIs form a critical foundation for measuring and managing supplier performance. Biznet simply defines them as "target driven metric indicators that help you maximize savings, improve quality and reduce incidents with your organizations supply base." But what do common KPI categories look like? With apologies to Biznet, whom quote verI batim because I think they capture the essence of where companies should focus their metric creation efforts in this area, organizations may wish to create the following types of KPI themes/groupings: cost (e.g., spend overruns, non-productive time), delivery (service delivery, product delivery, on time logistics), HSE (safety record, accidents, leading & lagging indicators, and, in the case of oil and gas, spills), quality (job quality, product quality), risk (late delivery, management, staff turnarounds), efficiency (days 10K, NPT, right first time) and innovation (new ideas, creativity, value add).
Specific KPIs range from the very, very simple to the slightly more complex. Take cost, for example. A KPI metric may simply be percentage saved based on cost avoidance or joint cost take out (e.g., a quarterly savings percentage target of 2%). In the area of health and human safety, a KPI may be more specific and/or complex. For example, Biznet suggests the following KPI for total recordable injury rate: recordable injuries and illnesses/total man-hours with a target of 0 or less. In the "people" area, a company may opt to set a KPI based on turnover of staff (e.g., number of staff leaving service divided by total number of staff on service) with a target of <5% per quarter. The data going into any type of KPI measurement can originate from either employee or supplier-entered information or systems data.
Stay tuned for our final post in this series.
Download Spend Matters latest Compass research brief in the supplier performance management and scorecarding area:
- Jason Busch