Comments on: Outsourcing Governance and “Who Owns Supplier Performance Management?”

By: Sameer Srivastava

Sameer Srivastava — Sat, 06 Feb 2010 11:45:09 +0000

Like you said, we need to be able to measure the value that the vendor management program offers the firm. For example, a company looking to hire employees on a contractual basis might have the following metrics in place:

1> Turnaround time from request to delivery of pesonnel
2> Quality of personnel provided e.g. no. of candidates hired
3> Rates of the candidates compared to what was being paid before
4> Completeness and quickness of the on-board and training program

These metrics and others should be based on the key objectives the procurement function has alongwith the overall company strategy

By: Traoloch Collins

Traoloch Collins — Wed, 13 Jan 2010 17:03:53 +0000

We believe that supplier performance management is a key ingredient not only to high performing sourcing relationships but also effective cost control. We are currently working on a model which allows all contracts in an organisation to be scored – based on weighting assigned to individual KPIs and also performance against the KPIs. We are in the process of trying to align that to an ongoing value analysis and cost management model. I will be happy to post you a link to our blog piece on this when we get something more concrete.

In the meantime this went up today which may be of interest – http://blog.serviceframe.com/index.php/2010/01/what-do-you-mean-by-vendor-performance-management/

By: Gerry Gatto

Gerry Gatto — Mon, 11 Jan 2010 15:30:06 +0000

I’m in the telecommunication industry in Canada and there seems to be a gap on this topic within our own company/industry. Here are some goals and ways to acheive them but certainly there are many more that can be added.

Goals of an SPM process
1. Ensure agreed upon metrics are being met or advancing in the right direction.
2. Ensure pricing and delivery agreed upon are being met.
3. Ensure contractual obligations are being met by both parties.
4. Seek to leverage value-adds from the vendor that will increase efficiencies to the organization
5. Keep internal stakeholders apprised of issues, opportunities and successes.
6. Work to lower costs; including inventory investment, unit pricing and other expenses related to procurement of goods

How to achieve its goals
1. Meet with vendors on a regular basis to access progress and track results even if there were none.
2. Verify invoices against contractual pricing and track audit results.
3. Track key contractual obligations and ensure stakeholders are aware of milestones
4. Work closely with key vendors to create value adds that supports your organization and in turn increases the profile of the vendor for future opportunities
5. Document results related to key vendors and share status with all stakeholders on a monthly/quarterly basis.
6. Understand the abilities of the vendor to support vendor managed inventory and obtain written commitments to hold stock exclusive to your companies needs.
7. Understand the vendor’s process to help streamline and reduce wasted efforts to drive their costs down and in turn reduce the unit cost to your organization; note this will require a more mature relationship with your vendor that must be built over time and with trust.