Supplier Performance Management: Data at the heart of the matter

Everyone understands it. Mastering one's supplier network and the ability to implement real partnership policies are essential for secure sourcing and are crucial both for profitability and for brand image.

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Once we agree on the subject, the question is how? What are the methods to implement a simple and effective supplier performance management?

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A global and collaborative approach

Supplier performance cannot be reduced to a pure analysis of negotiated prices, but must take into account a number of criteria related to product quality, service quality, and collaboration at all stages of the supply chain. This requires the ability to consolidate various sources of information and criteria.

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Thus, the topic of supplier performance is not exclusive to Purchasing or Quality. It must necessarily be part of a collaborative and cross-functional approach, breaking with traditional silos.

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Mixing qualitative and quantitative aspects

It is often heard within teams, "we know very well which suppliers are good." This "intuitive" approach, which relies on each person's experience and history of relationships with certain suppliers, should be taken into account but is not enough. It is important to structure supplier performance based on objective and comparable criteria, capable of consolidating both qualitative and quantitative factors. Indeed, the operational teams' intuition is essential in the context of a long-term partnership and has a valuable role as it stems from direct and daily relationships. However, the potential bias of subjectivity is too significant to rely solely on it, not to mention the valuable information losses related to team turnover.

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Supplier performance should involve as much objective and non-discussable data (such as annual sales volume, compliance with societal commitments, or average lead time for delivery) as it does more "soft skills" criteria such as communication ability, responsiveness, and creativity.

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A real-time and agile approach

With a constantly evolving market context on one hand, and a vast and complex topic on the other, it is clear that managing supplier performance involves a progressive and iterative approach. It is not possible to establish optimized and definitive processes in just one season. This means that the solution chosen to manage supplier performance must allow for easy modification and evolution of the supplier base, the depth of the approach, integrated teams, etc.

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Methods that consist of consolidating a multitude of different Excel files once a year to calculate various indicators have the merit of existing, but they are far too time-consuming and do not allow for the continuous management of supplier relations and procurement strategy in an agile and dynamic manner throughout the year.

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Where to begin?

The variety of information to be considered in analyzing supplier relationships, and the quickly significant volume of data involved, puts data at the heart of the issue.

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An organization's ability to organize, capture, structure, and control all the data related to its supply chain, and to leverage precise and effective improvement levers, is what makes the difference.

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