Are suppliers not doing what you expect them to do or is poor supplier performance driving you crazy? Then you are not alone. Ever wondered if there was a way that you didn’t have to work so hard when it comes to managing supplier performance? There is, if you apply certain proven tips and techniques for evaluating and improving supplier performance.

The key to managing supplier performance is the quality of the relationship. Often referred to as understanding the significance of the value stream, this requires both sides to be actively involved in keeping the relationship current and communication lines open. A supplier relationship should not be one of power and control, such as who has the biggest stick but one of mutual respect. Fortunately most suppliers genuinely want to do a good job so getting to know your suppliers and involving them in regards to the best way to behave towards your business is easier than we often expect.

A relationship breakdown will however most certainly result where there is a lack of clarity and alignment of your respective expectations for performance. Operationally this means don’t underestimate the value of documenting your respective expectations and dedicating regular review opportunities, as without this at the very least there will inevitably be an increase in the risk of failure and it will certainly reduce the chances of innovation or the benefits of a proactive and mutually beneficial supplier to customer relationship.

Trends and developments in purchasing and supply management suggest that implementing a supplier performance management and rating program is the most effective way to manage supplier performance, however many procurement managers say they have thought about it but have had difficulty getting started or getting the necessary organisational support.

Our tips when considering effective supplier performance management are:

Supplier performance management requires time and effort and is certainly not a one way street. Maintaining regular communication that includes a willingness to be open to input from our supplier’s perspective as well as our organisation’s stakeholders that is realistic, flexible and doesn’t sweat the small stuff is what counts. Identify what is essential to the relationship and remember to always provide positive feedback when it’s due; even suppliers like to know when they are doing a great job, so tell them.
Vendor Management is proud to be a leading provider of supplier performance management services. Further to this article, please take a few minutes to view our website and see how Vendor Management can help optimise your outsourced supplier engagements, reduce commercial risk, reduce saving leakage and upskill staff. Call us today onNZ 0800 464844 and ask us about our RISK FREE services.
Cathy has more than 20 years of experience across a wide range of disciplines including Service Delivery, FMCG, IT, Banking and Telecommunications having worked with major New Zealand and dominant global organisations. Outsource management, cost saving and contract management strategies are areas she is both professionally and personally passionate about.