Good Supplier Performance Management Starts With Performance Analysis

As per a recent article over on ChainLink Research, a diversified international manufacturer discovered that real improvements happened once it made performance information available quickly and easily to both buyers and suppliers, and then based buying decisions on that data. This was accomplished through a centralized tool that supported real data analysis. Every week the tool pulls all of the relevant data from the manufacturer’s various systems (ERP, MRP, factory management, etc.) into a single repository where it is mapped against a common data structure that can be sliced and diced as required by a commodity manager that needs to see productivity, quality, delivery performance, and spend data for the supplier by site, part number, or business unit, etc. This allows the commodity managers to see if they have been rewarding suppliers who were easy to work with but performed below par, or not rewarding suppliers who were perceived as not being easy to work with, but performing above par. As a result, behaviour changed quickly.

And once you have all of the relevant data available in an analysis tool, you can find unconventional uses that can benefit the organization. One example given in the article is when the CEO of the diversified manufacturer was negotiating with a senator. The tool allowed the CEO to quickly find out how much business was being done in the senator’s state and put together an argument regarding the firm’s contribution to the economy and local business. This is powerful information when lobbying for loans, tax breaks, or other economic incentives, which are often necessary when trying to expand the business in a rough economy.