This week's Knowledge Nugget is on Supplier Performance Management. This is part 1 of a multipart post. Links at the bottom of this post will direct you to the other segments of this discussion. Enjoy!
In order to mitigate risk in your supply chain, it is now more important than ever to effectively manage the performance of your existing and new suppliers. Performance management gives an organization the capability to effectively communicate strategy and to ensure that business processes are aligned to support the deployment of that strategy. A management process using Key Performance Indicators (“KPIs”) grouped into scorecards can be also be used to monitor and manage the performance of a process or organization to achieve certain objectives.
Performance management can be addressed at the enterprise level (ESM) of your organization as well as at the supplier level (SPM).
At Ariba, we view performance as a system, not just a scorecard.
The Performance Management Process
- Performance Management - a comprehensive management process which systematically links a company’s strategy, resources, and processes.
- Key Performance Indicator (KPI) - a quantifiable performance measure developed to monitor the progress towards the achievement of strategy and the creation of value. Evaluated on a regular, frequent basis to manage the business.
- Operational Statistic - A measure of performance referred to periodically to give diagnostic insights but not used to manage the business.
- Performance Measure - an indication of the work performed and the results achieved in an activity or a group of activities; a measure of how well an activity meets the needs of its customers.
- Balanced Scorecard - A collection of KPIs and targets, balanced across several categories (cost, quality, timeliness), which together determine the overall degree of success at achieving strategy and creating value.
The first step in the program is to effectively articulate your strategy:
- Depicts what your organization wants to achieve
Clarity of Purpose
- Developing and communicating clear and concise strategic objectives will ensure that the appropriate direction is set for the organization
- The strategy should facilitate the link from the corporate level to the objectives of each work group in the organization
Links to the rest of this topic below:
This has been another Knowledge Nugget post brought to you by Beverly Dunn.
For more information or details please feel free to contact me!