Supplier Performance and Operational Management — The Technology Fundamentals (Part 3)

Click here for the first two posts in this series covering supplier performance and operational management fundamentals (Part 1 and Part 2). This series of posts is based on a presentation that Sherry Gordon and I gave at ISM in the risk track covering "Core Risk and Performance Technologies You Can't Afford to Be Without." SPM and related areas are Sherry's core expertise, and if you're looking for outside input in the area, I can't recommend her knowledge and skills enough. Now, back to the topic at hand...

Perhaps most important when ijustifying the value of SPM and operational management tools, it's possible to create a list of benefits that go materially beyond what most companies implement basic score-carding programs for. For example, these technologies can help you better understand who suppliers are, gain better insights into supplier performance, improve and build relationships and identify risks through early warning signs within your supply chain. They can also help prevent and mitigate supply risk, enable procurement organizations to set criteria for new supplier on-boarding and approved supplier list, play a key role in driving supplier rationalization programs and more quickly help companies to disengage with low performers and high-risk suppliers.

In addition, SPM and operational management technologies can:

  • Enable procurement to give more business to high performers
  • Identify supplier continuous improvement opportunities
  • Gain insights that help suppliers improve their performance and reduce costs and risks
  • Work on development projects with suppliers
  • Create preferred or certification program

How can companies know they're getting off on the right foot when it comes to supplier performance and operational management technologies? At ISM, we suggested that success depends largely on adoption and organizational discipline. So don't just focus on the technical roll-out and KPI definition, but rather organizational adoption and change management. Also, know what you're after with a program as well as the technology you're considering -- strengths vary in applicability to direct vs. indirect suppliers (e.g., site visits, corrective actions vs. compliance monitoring).

Fortunately, we believe that based on our own field research, the number of successful SPM deployments has been increasing. This goes for both companies using tools from providers on a limited basis as well as broader, more encompassing deployments. But know what you're getting into first -- and why!

Jason Busch

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