Hello Aribians!


This week's Knowledge Nugget is on Supplier   Performance Management. In part 3 we covered the second step in the  program - setting measures and targets that will tell you whether you are creating value and achieving the strategy. This is part 4, where the Third, fourth, and fifth steps of the program are discussed. Links at the  bottom of this post will direct you to the  other segments of this  discussion. Enjoy!


The third step in the program is to develop performance plans that will enable the organization to reach the KPI targets:

Performance Plans

  • Plans established specifically to dictate how quickly KPI targets are achieved. These plans can drive the budgeting process

Prioritization of Resources

  • Performance plans help prioritize existing and future initiatives such as implementation of technology, optimization of resources, and alignment of business processes

The fourth step in the program is to continuously monitor and evaluate performance results:

Performance Monitoring and Evaluation

  • The consistent and continuous reporting and feedback of performance results against targets. This monitors the effectiveness of performance plans and the ultimate creation of value

Management Discipline

  • Performance Monitoring and Evaluation institutionalizes the performance management program as the primary means of dialogue for discussing business results -the common language - and creates management focus on important strategic and operational issues

The fifth step in the program is to encourage the desired behavior to achieve performance results:

Reward and Coach

  • Behavior that is aligned with the achievement of performance targets is rewarded. Actions that are not aligned with the optimization of performance results are realigned

Responsibility and Accountability

  • The Reward and Coach process is one of the key enablers that drive responsibility and accountability in the organization -thus promoting a performance-centered culture


Scorecards reinforce accountability of owner to achieve targeted results:


Internal managers, teams and business units accountable for delivering results

  • Incentive comp plans, recognition programs
  • Performance reviews, coaching/ performance plans

Suppliers accountable for achieving results

  • New business award
  • Preferred terms and negotiation process


Additional Informative Data
How Some Companies Do It TodayTop Procurement Initiatives for the next 3 years*
  • Manual effort
  • Home built portals connected to databases
  • Hangs off of their corporate websites
  • Scores of employees to do the heavy lifting: planes, Google search, phone, fax, email, reminders
  • Research new suppliers, attend trade shows etc.
  • Manual data cleansing
  • Corrective action projects, internal scorecards, Excel Spreadsheets
  • Cross referencing and validating financials, tax ids, certifications
  • Improve supplier development and collaboration
  • Transition to a centralized or center-led procurement organization
  • Upskill and improve talent of purchasing team
  • Improve supply risk management capabilities
  • Locate, secure, and manage low-cost country suppliers
  • Improve and standardize supply management technology infrastructure

*Economist CEO Study featured in Global Supply Management: Strategies for Success in the New World Economy


Links to the rest of this topic below:

Supplier Performance Management Part 1: Intro to Supplier Performance Management

Supplier Performance Management Part 2: The Supplier Management Program

Supplier Performance Management Part 3: Measures and Targets




This   has been another Knowledge Nugget post brought to you by Beverly Dunn.

For   more information or details please feel free to contact me!