Measure Suppliers on Strategic KPIs and Factors – 10 Services Procurement Secrets (No. 9)

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Consistent and effective supplier performance management programs are one of the secret weapons of top performing direct material supply chains. Leading programs measure suppliers on strategic factors such as innovation, sustainability and revenue growth.

The same efforts should cascade to services supply chains as well (but often do not). Examples are there to follow: best in class procurement organizations are increasingly tapping suppliers to gain innovative ideas – from driving sustainability programs to focusing on revenue growth.

Yet such collaboration is all too often lacking with services suppliers. The scope of supplier innovation must be broadened to cascade across the services supply chain as well. From crowdsourcing ideas to formal supplier performance management efforts with top suppliers centered on rewarding innovation rather than penalizing poor performance, there are several tactics to drive results.

Measurement, however, is what will enable these efforts to become self-sustaining. Just as P2P solutions and suites tend to come up short in this area for indirect procurement, VMS tools today are not the best answer to engaging suppliers in strategic performance reviews, especially ones aimed at driving innovation. Specialized supplier management and even more specialized supplier performance management (SPM) solutions are the best bet – especially when coupled with overall program support and best practice on a category-by-category area.

This analysis is based on the Spend Matters research study, Applying Supply Chain Rigor to Contingent Workforce Management, which is available for limited period of time for free download in the Spend Matters research library.

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