Supplier Management Best Practices

 

No Program

(49% of businesses)

Industry Average

(36% o businesses)

Best in Class

(15% of businesses)

Program Metrics
  • No programs or processes in place
  • Have seen some improvement
  • Measure <25% of suppliers
  • Performance Improvements with >20% of suppliers
  • Measure >25% of suppliers
Documentation
  • Documentation does not exist
  • Saved locally, not centrally
  • Lack of organized data and quarterly performance plans
  • Documentation shared in online folders
  • Supporting data an comprehensive action plans saved quarterly
Reporting and Charts
  • No reports exist due to lack of quantitative data
  • Reporting is a manual process; occurs only when users manually input data
  • Reports populated by user-defined KPI's
  • Charts updated after each review period and used to track performance
Standardization across Groups/Divisions
  • No standardization exists
  • Users have own review processes
  • Little to no standardization exists
  • Users may use standardized scorecards, but have individual review processes
  • Pre-configured commodity templates and processes in place
  • Allows for standardization and repeatability
End User Training
  • No formal training
  • Manuals used to train users, or user is given scorecard to fill out
  • Written and/or WBT (web based training) are used
Integration
  • No integration with other systems
  • No integration with other systems exists; data gathered from ERP
  • Integrated with sourcing software
Supplier Information Management
  • No on-boarding process exists
  • Information gathered from RFI's stored on local drives
  • On-boarding process exists; information collected and saved on shared drive
  • Not indexed / not searchable
  • Online on-boarding process
  • Automated systems to capture and report supplier information
  • Certificate expiration and document management automated
Supply Risk Management
  • Key metrics unmonitored; information discovered through public resources
  • SPM program monitors key metrics to measure risk, as financial information is unavailable
  • Key financial metics collected and tallied for Risk Scorecard
  • Metrics gathered through subscription-based resources to form holistic picture
Supplier Performance Management
  • No process in place
  • Basic process with quantitative metrics and annual scorecards
  • Advanced, automated process with quarterly reviews, quantitative and qualitative measurements from surveys, scorecards and reports
SPM Publication Process
  • No formal publication process
  • Email is typically used
  • Surveys are often not published
  • Automated task lists and scorecards on a quarterly basis
  • Publication of results
Cycle Time/Review Period
  • Annually if at all
  • Annually except for high risk suppliers
  • Quarterly
Scorecard Review Sessions
  • Account reviews are not guided by quantitative metrics
  • Held in personor via teleconference
  • Supplier receives scorecard during review session
  • Meetings for validation rather than corrective actions
  • Live meetings
  • Supplier reviews scorecard prior to session
  • Focused on improvement plans
Key Performance Indicators
  • Do not exist, other than from ERP reports. (IE - Defect rate, on-time delivery)
  • Quantitative metrics tabulated in an ERP system
  • Other KPI's, if the exist, are yes/no format
  • Comprehensive quantitative and objective survey metrics such as account management from members of organization
KPI Values
  • Do not exist
  • Quantitative measurements on a 0-100 scale
  • Qualitative measurements, if they exist, are yes/no format
  • Rigorous, multiple-choice values for all KPI's, with customized responses
# of Survey Respondents
  • Zero
  • Typically < 3
  • 10+, accounting for divisions within organization (engineering, finanace, legal, sourcing, etc.)
Automation
  • No Automation
  • No automation
  • Surveys an scorecards automatically created quarterly
  • Survey scores automatically average and populate scorecards

 

To return to part one of this Knowledge Nugget please follow this link: Building a Successful Supplier Management Program

 

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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.