Supplier Performance Management – in 3D

Another of the presentations we attended at eWorld was “Why Current Supplier Performance Management Sucks,” from Old Street Labs’ COO, Jeff Jones. (Strange term, sucks – read ‘inadequate’ or ‘lacking’ in English English. It reminds me of the old Electrolux advert that said ‘the vacuum that really sucks’ the Swedes not realising what it meant to Americans!). We’ve talked about the firm before: back in 2014 we were excited to see how its platform Vizibl (which manages all commercial relationships) would evolve, so it was good to see them presenting at eWorld, for the first time. It was an interesting talk, mostly based on how technology is disrupting the SRM space, the company’s take on how to get value from relationships and get visibility across all stakeholders.

Responsibility for external spend is greater than ever and networks of suppliers are growing enormously. Large enterprises could now unlock previously missed value from their commercial relationships if it weren’t for the effect of outdated tools that are slow, complex, fragmented and unwieldy. What the platform aims to do is dig out the expertise, innovation and experience that resides in those networks.

Vizibl is creating new ways not only to measure and monitor supplier performance, but manage the end-to-end performance of a buyer-supplier partnership and extract value. It gives a ‘live visible feed’ (like in the social media sense) of how a relationship is preforming, engaging the organisation with suppliers, partners, vendors, in fact all stakeholders, thus driving behaviours around those relationships.

Current ways of managing performance, he says, tend to look only at tactical performance metrics, which often results in one-dimensional or short-sighted perspectives. Your scorecard may be great, but the managers around your business probably don’t have time to look at it in any granularity. You might have a slide deck with one to three months’ top-line metrics – but it’s not current, or detailed, or maybe not even accurate.

The problem is:

The scorecard – it needs to measure and drive transformation.

KPIs -- once you’ve got 15 or more they are no longer KPIs – you really shouldn’t have any more than 12.

Ownership -- without it, there’s no-one to measure those metrics, they aren’t tracked frequently, they are hidden in desktops and laptops.

Siloed metrics – you should be looking at end-to-end metrics and at suppliers’ needs too.

Feedback (if you get it at all) -- you need qualitative and quantitative feedback across all stakeholders.

Spreadsheets – metrics measured and trapped in spreadsheets, emailed around until there are different versions, data gets dirtier and dirtier, people get infected with STDs (spreadsheet transmitted data). As the spreadsheet gets more complex, only one person is able to distil any information form it – then they leave the company …

So performance management can suck!

Our model, he says, is a 3D, holistic view of end-to-end impact on business and the supplier. People must engage with your performance measurements – the world has moved on, technology can lead the world and make your life easier and role more impactful. The global market is changing rapidly, and if you aren’t agile, you will fall behind.

3D Performance Management recognises that partnership performance is a multi-dimensional, two-way, end-to-end and future-driven approach that moves away from an exclusive focus on day-to-day and tactical considerations. It encompasses three dimensions: operational performance, relational performance and transformational performance.

Operational performance, usually looks back in time. Its purpose is to monitor what counts for the Business, in a way which promotes the successful and sustainable delivery of goods and services required to support the end-to-end business value chain.

Relational performance, its purpose is to monitor what counts for the Partnership, in a way which promotes the successful and sustainable delivery of values and behaviours required to support a healthy business relationship. Big partnerships depend on people to be successful -- in SRM consider the working relationship: is the company responsive, proactive, and are successes shared. We all want to be the customer of choice.

Transformational performance, its purpose is to monitor what counts for the Future, in a way that promotes the successful and sustainable delivery of outcomes required to fully execute a Shared Vision. The trick is to figure out a real vision then work backwards and ask: what will it take to achieve that?

Successful performance management that delivers value is about sharing innovation and opportunities; this means sharing risk, it’s important for the relationship to share successes and failures.

That’s the key points from the speech, but there’s a very good collection of short, to-the-point, papers on the website which cover fully SRM, 3D performance management etc, which you can download for free here – and they are numbered, so you can start with 1 and work your way through.

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