Over the past month, Ardent Partners has featured analysis from The State of Strategic Sourcing 2014: Connecting the Dots, which is now out and available. Interested readers can find the report here and here.
This research report analyzes the strategic sourcing programs of almost 250 distinct procurement departments and presents the Best-in-Class competencies for improving the sourcing function and its results while also highlighting the market trends that shape strategic sourcing today. This report also utilizes market statistics to quantify and examine what leading sourcing organizations are doing to outperform their peers.
In the report, we introduce the concept that there are four primary “pillars” that mark the foundation of the modern strategic sourcing program – spend analysis, sourcing, contract management, and supplier performance management. All four are valuable business processes that, when automated, can elevate a sourcing team’s performance and that, when connected, can transform an entire operation. Today’s article will focus on the fourth pillar, supplier performance management – as both a business process and an automation tool.
What is Supplier Performance Management?
Supplier Performance Management (“SPM”) programs help enterprises rate and grade a supplier’s performance across all aspects of its products, services, and contractual obligations. Standardized processes help drive efficiencies and enable teams to leverage knowledge and best practices across business lines while users of automated SPM systems can develop supplier surveys and scorecards that track performance and collaborate with internal stakeholders and suppliers to improve performance. SPM can help better manage current operations and it can play a key role in evaluating incumbent bids by adding context during a new sourcing project.
A clear view of supplier performance can help procurement departments find the best supplier partners for future contracts and investment in innovation projects. In turn, performance feedback that helps suppliers improve their business can serve as a powerful incentive for a supplier to invest in the relationship.
High Potential, Despite Low Capability and Adoption
Supplier performance management can help sourcing teams to “connect the dots” with their suppliers and make better-informed sourcing and supplier decisions. However, companies of all maturity classes have been slow to institute, standardize, and then automate a supplier performance management process. Only 34% of Best-in-Class sourcing teams have adopted automated supplier performance management tools compared to 22% of all respondents – this was the lowest adoption of all four automated strategic sourcing solutions.
While supplier performance management processes and solutions are frequently overlooked tools in the CPO’s toolbox, 54% of all respondents state that they plan to adopt automated supplier performance management tools in the future. Be sure to check back for more insights and analysis from The State of Strategic Sourcing 2014: Connecting the Dots, but in the interim, grab a copy of the full report by clicking here and here.
RELATED ARTICLES
Contract Management: The Third Strategic Sourcing Pillar
Sourcing: The Second Strategic Sourcing Pillar
Spend Analysis: The First Strategic Sourcing Pillar
The State of Strategic Sourcing – Connecting the Dots
Research Preview: The State of Strategic Sourcing in 2014
The Four Pillars of the Modern Strategic Sourcing Program
