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Selling your team on a Supplier Performance Management program

As a procurement professional, you don’t need convincing that Supplier Performance Management (SPM) — including goal setting, feedback and reviews — positively impacts your business and creates accountability for all.

But convincing management, suppliers and your colleagues isn’t always so easy. Here are a few simple points to convince your management and stakeholders on the power of investing in SPM.

Goals and Action Plans empower supplier accountability

First and foremost, all suppliers want to make an impact, and goal setting empowers teams on both sides to get their priorities straight. SPM involves 1) setting action plans and tangible goals with suppliers (e.g., meeting sustainability or ESG metrics) and 2) regular check-ins to assess whether goals are met using data-driven KPIs.

Don’t think of SPM as just a “corrective” action plan for poor performers; think of it as a way to maximize all supplier relationships. SPM allows you to identify opportunities for both you and your suppliers, which paves the way for long-term, strategic business relationships.

It’s critical to challenge both low and high performers and coach them to be better; the ROI to you is the difference in value between the job being done, and the job being done well. 

SPM drives supplier retention and reduces turnover

I beg our clients to meet with my team and me on a regular basis; before we were grounded, I would always fly here, fly there, and spend a couple of hours at a client site for a quarterly business review. I would always want to know what we were doing well, but more importantly, what wasn’t going well, so we could get back on that plane and start fixing it the next day. Good suppliers always want more feedback. They also want to give your organization feedback; the relationship is a two-way street, and failing to see your suppliers’ perspectives carries its own risk (e.g., failed product quality, failed trust, decreased loyalty).

However, seeing your suppliers in-person can no longer be relied upon to secure supplier relationships; a transparent, ongoing feedback loop (that is virtually facilitated) is what will establish trust long term. Otherwise, poor supplier performance, bad customer service, and stakeholder dissatisfaction will all cost you money. After all, if your supplier relationships fall through, a lot of time and money will go into replacing and onboarding new suppliers; these costs will far exceed the expense of implementing SPM software.

So, if you are looking to show the ROI behind SPM processes, start by positioning SPM as a driver of supplier retention and a reducer of turnover.

Good SPM is supported by powerful data

This is such a cliché, but it is true. You can’t manage what you don’t measure. Being data-driven isn’t an aspiration today — it’s an expectation. If you’re trying to convince management to implement a SPM process, start by selling them on the opportunity to gain valuable and actionable data.

Your team probably already knows the gold is in the data, which is why your supplier managers are spending too many hours per quarter asking employees, over and over, to fill out supplier scorecards. However, data collection shouldn’t be such a chore. Tedious data processes are what inhibit quality data in the first place.

The right SPM technology has an easy-to-use interface, drives engagement and gets all stakeholders eager to participate. It provides a platform not only to share basic information (e.g., certifications, scores), but also share contextual information (e.g., company direction/innovation, extended network) which can then be transformed into valuable insights.

Ultimately, SPM is interactive and requires sharing a lot of data ongoingly, and data is key to your analysis. Your management team needs to know that effective SPM data processes cannot be reasonably accomplished using spreadsheets; attempting to do so is more trouble than it’s worth. 

To conclude, SPM delivers more than just ROI; it takes a lot of work off your plate and in a nutshell, gives you more control over what could otherwise be the most uncontrollable aspect of your business: your supplier relationships. It’s worth getting a demo of SupplyHive, an SPM technology, which empowers your team to share feedback, set and track goals, manage performance reviews, and drive accountability in a fun, fresh, easy way — seeing this in action can only bring you a step closer to selling your team on SPM.