Measuring supplier performance and keeping up appearances!

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Measuring supplier performance and keeping up appearances!

February 14, 2021
By Narta

The balance of power amongst suppliers and customers is very different depending on the category. If you are reviewing important partnerships here are some of the key activities you need to look at to measure ongoing performance.

You might think that it’s easy enough to identify the most important suppliers. But the reality is that this can sometimes be one of the most challenging parts of SRM. You can easily find yourself leaning towards suppliers that you know more about, or suppliers that you have had contact with most recently (hard in lockdown!), or indeed the suppliers who have the biggest contract. So, it’s critical to take a holistic view of your suppliers and understand what they bring to your company.

Defining the relationship comes first

To help you deliver on your commitments, you first need to look at segmenting your supply base. To do this, you will need to apply a set criteria to determine why these suppliers are important and what sort of intervention and relationship would be necessary or beneficial.

There are many factors which drive supplier importance and different criteria that would be the basis for segmentation. These might include:
  • Risk
  • Spend
  • Business importance
  • Sustainability
  • Ability to innovate
  • Market difficulty for the key areas of supply
  • Alignment with business ethics, beliefs and CSR policies
  • Existing obligations or contractual commitments
  • Distribution channels
  • Uniqueness of knowledge or know-how held by supplier
  • Accreditations or compliance with regulations

Key to the segmentation process is keeping your company’s operational goals front of mind when selecting the criteria. For example, if one of the business objectives is to be a pillar of sustainability in everything you do then sustainability and alignment of ethical principles and policies are key to helping you decide which suppliers are important.

Similarly, if you need a particular technology or innovation to help you grow market share, but don’t currently have access to it through existing suppliers, then ability to innovate would be a key criteria to be applied to both existing and potential new suppliers.

How do we keep the magic alive?

At NARTA, we ensure that individual business requirements are incorporated within sourcing activities and our overall SRM strategies to complement your business.

It is very hard as we all communicate virtually to keep the same level of engagement as we did before the pandemic. The frequency of communication, reducing the reliance on emails alone and having more regular WIP’s are all important. We are working with your suppliers to ensure that from our side we keep the partnership fresh, bring new ideas to the table and ensure that the contact doesn’t just stop when the ink dries on the contract.