Typical programs have different levels for supplier participation
While naming conventions may vary, programs typically cover three major supplier segments or tiers:

 

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Supplier Tier Determines Components
STRATEGIC
            • Executive sponsors at both buyer and supplier organization
            • Monthly and Quarterly meetings
            • Robust scorecards evaluating both supplier and customer performance against objectives
            • Joint teams working on site at customer; often difficult to know who is supplier and who is customer team member
            • Individual performance goals on both sides include metrics evaluating output/ performance of collaboration efforts
            • Cost sharing/ gain sharing
            PREFERRED
                  • Sponsors at senior level in organization; may or may not be executives
                  • Quarterly or bi-annual meetings
                  • Robust scorecards evaluating supplier performance against objectives
                  • Cost management goals
                  OTHER/TRANSACTIONAL SUPPLIERS
                    • May or may not have scorecards and metrics in place, depending upon resources available to support program and value to be derived
                    • Historically this category of supplier has been overlooked due to the investment required, with the advent of technology to automate the program, we expect to see more of these suppliers brought on board to client programs

                     

                    Implementing a Best-in-Class Supplier Management program

                    1. Solidify sponsorship of internal champions and executives
                    2. Establish robust supplier on-boarding and information management process
                    3. Determine Supplier Segmentation Model (i.e. strategic, key, transactional)
                      • Select a pilot organization and pilot suppliers and understand what is currently being measured
                    4. Pilot specific categories and/or supplier tiers
                    5. Define the process for gathering and reporting scorecard results, and managing supplier
                      performance
                    6. Automate Contract Management process to drive compliance
                    7. Solidify metrics (including data sources and calculations)
                      • Establish key performance indicators (KPIs)
                      • Define scorecard and survey questions and templates
                    8. Analyze results and communicate to suppliers
                    9. Collaborate with suppliers to improve performance

                     

                    The following all impact and are impacted by risk management policies:

                      • Greater volumes
                      • Global economy
                      • Revenue generation & acceleration
                      • Cost containment
                      • Compliance

                       

                      For Supplier Management Program Best Practices follow this link: Supplier Management Best Practices

                      For more on Supplier Management view my previous blog post: What is Supplier Management?

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                      Beverly Dunn is a Customer Success Manager with Ariba. All customers are invited to join the private Customer Success group on Ariba Exchange, where you can access the Customer Success  Spotlights, Lunch 'n Learn Webinar calendar and replays, and the Ariba  Knowledge Nuggets.