by Vishal Patel
The wave of globalization has made businesses more reliant upon their suppliers than ever before. This reliance can increase supplier risk or uncover a large source of value and supplier innovation for organizations.
In order that sourcing and procurement teams fully optimize their supplier network, there needs to be a change in the way organizations view all suppliers. Suppliers are no longer just transactional in nature to be kept at arm’s length. They are integral partners that require management to reduce supplier risk, improve supplier performance, and foster supplier collaboration across the entire supply chain and throughout the complete supplier lifecycle.
This checklist has been designed to to help your organization put together an effective supplier risk and performance management (SRPM) program as well as provide guidance for the technology to enable it.
What is your organization’s objective in investing in a supplier risk and performance management program? The following are some of the most common objectives for implementing a supplier risk and performance management program.
Implementing and automating a successful supplier risk and performance management program can yield significant value in many areas.
In organizations with a large supply base, numerous and varied commodities, large group of stakeholders, and unique/regionalized business requirements, this value can be replaced with churn. This churn can sabotage procurement automation initiatives and the overall program.
This can occur because many individuals are impacted by suppliers and many maintain close relationships with their suppliers. Such relationships can be seen as profoundly personal and stakeholders can be territorial about disrupting existing procurement processes and supplier relationships.
This type of issue is not uncommon and highlights the need to have a structured process that is inclusive of stakeholders.
Considering the people and organizations involved will help avoid landmines, inject transparency, and ensure a complete and scalable process to support the entire business throughout the supplier life-cycle.
Here are some recommendations when dealing with individuals and organizations.
It is not uncommon for organizations to have many disparate supplier risk and performance management processes to address different types of spend, categories, regions, business requirements, and more.
These processes rely upon different systems (if any at all) and utilize numerous and disconnected sources of data. This lack of continuity leads to grossly inefficient processes and can be a roadblock to compliant and scalable programs.
The following identifies a common approach for managing critical aspects of supply base.
Understand the current state of your supply base. Determine all the sources of supplier information within an organization. Assemble all available information on suppliers.
Segment suppliers into relevant groups and identify standards and processes that each group is required to meet as a minimum.
Distill actionable requirements from high level goals to include items like the following:
Perform a gap analysis to determine strategies for the following:
Assess new suppliers against requirements and goals.
Track key aspects of the supplier risk and performance management program, including:
We hope this checklist helps your organization prepare for a successful supplier risk and performance management project.
If you have found this checklist useful, you can download the full document which includes guidance on supplier data, metrics and technology.
Vishal has spent the last 15 years in various roles within the Procurement and Supply Chain technology market. As an industry analyst, he researched and advised organizations in various industries on best and innovative practices, digitization and optimization. He brings a thorough understanding of market trends and digital technologies that can help enterprises be more effective with their Procurement and Supply Chain strategies. He works to ensure that organizations are empowered with technology platforms that enable flexibility, innovation, and agility.
You can connect with Vishal on Linkedin