The inefficiencies of collecting supplier performance information manually using spread sheets

Many companies that I talk to about Supplier Performance Management (SPM) will already have some basic processes in place to gather supplier information. Invariably this involves gathering scorecard information in Excel spread sheets. Typically e-mails are sent to suppliers every month, the suppliers complete it and sends it back. It is then an onerous task for an analyst to chase each overdue supplier, then to take all the scorecards and import them into a master spread sheet, convert units of measurement; currencies etc. and then create reports using complex series of macros that represent key performance indicators. It can take several days to gather and collate this information into reports and is extremely frustrating.
Spread sheets are a common basic platform used in every company, most people can use and they provide an excellent starting tool for basic SPM. However they do have some fundamental flaws, listed as follows:

• Spread sheets cannot compare data across multiple users, systems and sites
• There is a high work effort required to maintain spread sheets
• Spread sheets can facilitate the manipulation of data
• Spread sheets lack an audit trail
• Information is unaccountable to management
• Spread sheets have version control issues
• Information is cumbersome to share with fellow users
• Spread sheet scorecards are disconnected and independent of all procurement teams and software.
• Spread sheets do not promote collaboration between users

Over a decade ago Biznet recognised the pain that companies were facing with spread sheets and saw the opportunity to develop a web-based platform that would enable the collection of supplier performance information. For more information contact marketing@biznetsolutions.com

Features of SPM Reporting

In the last part of this post we looked at the need for a dynamic reporting functionality within a Supplier Performance Management system.

Now in this post we can look at the key functionalities of leading SPM vendors that can be used to help better report on and manage supplier performance.

As discussed dynamic dashboards and graphs has become the preferred method for reporting on data. The ease at which colour coded metrics can instantaneously provide visual impressions of performance has made such tools a must for all organisations.

Therefore effective SPM reporting relies heavily upon a systems ability to use captured performance data and produce meaningful reports. A key requirement of such functionality is the ability to generate bespoke reports based on time, location & supplier. For example to build a meaningful report based on Supplier A one is able to filter data to show performance over individual product lines, locations and time periods. This flexibility provides users with the opportunity to drill down into data to identify performance trends and issues.

Click on the dashboard to learn more

This performance data can be manipulated and displayed in a number of visually impressive dashboards. A number of variable options provide users with a plethora of potential reporting options to present supplier performance reports.

Users can now, with the leading vendors, use the performance data reporting options to create unique Supplier Awards. Supplier Awards have become an increasingly popular tool to manage key supplier relationships. Leading SPM vendors allow for users to use the reports to generate these unique awards. Officially awarding & documenting good performance has become a great incentive for suppliers.

Reporting- Part 1

Reporting is a major component of the Supplier Performance Management system. For those who work within the supply chain & procurement industry having visibility and the ability to produce key reporting metrics is key to maintaining a level of control & performance management.

In this blog piece I shall look at the fundamental need for reporting, keys reporting features and the benefits of reporting for SPM.

As we have discussed many times in this blog, Supplier Performance Management relies upon having the ability to capture key data, process this data and allow for action to be taken on it. Reporting plays a huge role in this process by allowing a user to work with captured supplier data across any number of pre-determined hierarchical or time zones & produce meaningful output.  Without a full range of reporting options performance data would be lost.

Information displayed in a visual dashboard has replaced traditional written reports with plain tabular figures. This is a trend not only within the Supply Chain & Procurement industry but right throughout the business & academic community. Visually striking & dynamic interfaces allow for a more striking impact.

This has driven leading SPM vendors to allow users to build these dynamic Reporting dashboards. You can see an example below from the industry leader. They allow performance data to be created into dynamic user friendly reports. Graphical options as well as the ability to create fully interactive colour coded reports driven across predetermined locations and date ranges deliver a superior Supplier Management solution.

For many Supply Chain Managers having the option to build such reports makes successful performance management a more transparent and achievable process.

Importance of Reporting for Managing Performance

As we have discussed on many occasions managing supplier performance is crucial to ensuring a world class supply chain. The last post looked at how  developing relationships with key suppliers plays a major role in maintaining a high performing supply chain.

Reporting is the crucial function in helping manage these key supplier relations. Reporting along your supply chain has been regularily cited by AMR as crucial to maintaining the top global supply chains. In this regard when we refer to supplier reporting this involves development of a reporting culture and process.

The top SPM vendors have a dedicated approach. To examine this we can look at the latest exclusive article from Jason Busch at Spend Matters. He identifies how the leading vendor has a 4 pronged approach to reporting;

http://www.spendmatters.com/index.cfm/2011/1/20/Biznet–A-Market-of-One-for-Highly-Focused-Supplier-Performance-Management-Part-1

  • Single Supplier Reporting
  • Various Suppliers across a Service
  • Single Supplier across Various Services
  • All Suppliers across All Services

A strategic approach to reporting gives your organisation the ability to develop dynamic reports that, in helping develop key supplier relationships, helps significantly improve performance. It does so through allowing a greater supply chain visibility for all parties.

 

 

 

Supply Chain Relationships

Best practice for supply chain dictates that managers should look to form closer, longer term relationships that deliver long term value to both parties.

Many supply chain experts, when defining SCM, look to emphasis the importance of these relationships with key suppliers in increasing value and reducing total supply chain spend.

Strong relationships help drive collaboration, trust and value throughout your supply chain. Top level organisations recognise the importance of developing and maintaining world class supply chains that give them competitive advantages from others in their market. One such example has been Apple, a world class supply chain has complementing their creative drive to make them the leader in their market.

Transparency and performance have always been important for organisations looking to be market leader. Therefore many of them are starting to recognise the value in SPM for nurturing supplier relationships through a performance culture.

Performance review meetings can become common place for maintaining relationship supported by world class performance analysis.

Using custom built reports and dashboards, supplier relationships can be maintained and nurtured to ensure your supply chain can be world class. Global supply chains are complex, high number of in putters, long distances & language barriers and an SPM system can help manage all of these.

The barriers that traditionally would prevent strong relationships being developed can be overcome through adopting a SPM approach. Reporting and reviewing performance allows for greater contact with suppliers, to address issues and find resolution.

Performance management can play a role in SRM and help reduce bottom line spend and help optimise your supply chain.

Seasons Greetings

I would like to take this opportunity to wish all of our readers a happy festive season and New Year to you and your family.

Next year promises to be an exciting progression for the SPM Blog. We will have several new series of guest contributions from a range of SPM specialists. Furthermore the blog hopes to carry on growing to as many networks as possible and both increase our readership & understanding of Supplier Performance Management.Most importantly your contribution is so greatly appreciated and we hope to hear from you on what you want to see on the blog in the future.

To contact me directly you can reach me at: aedan.toal@biznetpm.com

Wishing you a happy and safe holiday season, see you in 2011!

LinkedIN Poll- SC Metrics

How do you capture supplier metrics?

You can vote here.

Implementing Supplier Performance Management Systems. What are the barriers and steps to implementation success?- Part 3

Based on Sherry Gordon’s analysis my client has failed on at least four of the above; they have no clear and robust process in place, their communication with key stakeholders like their suppliers has been weak at best and non existent at worst. They have made no obvious attempt to communicate how suppliers have met or not met performance expectations based on measurable targets and there is no obvious linkage between the data collated in the system and corrective actions.

On the positive side they do have management support for the system and they are making SPM a key part of their organizational goals and objectives.

So how do they move forward and what will be my recommendations?

• Firstly I am recommending that they re-evaluate their future implementation strategy. I believe that if they use an implementation model that supports a central administrator with local ‘Champions’ who will engage with the ‘on the ground’ folks in designing scorecards and reports relevant to the work that they do. Ensuring stakeholder feedback and participation in scorecard development will help engender buy in to the process and hopefully encourage more feedback from all participation.

• Cleanse the system of cards and reports that are no longer relevant or necessary to clean up the system, simplify it and reduce complexity for users.

• Tier the implementation a supplier and a sector at a time –take a select group of suppliers and participants and get their complete buy in and participation. Once this group is actively using the system for their performance measurement then move on to the next group. Try not to bite off more than can be chewed by trying to do too much at once.
• Leverage the management support that is there to encourage participation and use the management platform to communicate the SPM group’s plans and system initiatives.

I am very hopeful that by adopting the recommendations I will make and with assistance from us in six to eight months this system will be in a very different place and will be a key enabler of this clients overall SPM strategy.

I would be interested to hear your thoughts as well. Have you implemented a Supplier Performance Management system in your organization? What worked and what didn’t work? Do you think the recommendations I am making will add value for this client? I would love to hear your comments below.

Reference -:

Gordon, Sherry R. “Supplier Evaluation: The Value Proposition”
sgordon@valuechaingroup.com

Implementing Supplier Performance Management Systems. What are the barriers and steps to implementation success?- Part 2

In addition to the business process and system reasons for implementation failure referred to in my last post there are scorecard specific reasons for failure also;

• Internal stakeholders don’t provide input on a timely basis or not at all. This is a key issue in all of the implementations I have been involved with. Supplier participation is often very, very high and near enough guaranteed because their involvement in the Operators SPM program is part of their performance contract. However, Operator employee participation is not as embedded in performance contracts/reviews and oftentimes it is this side of the process that fails. Many scorecards lay out there ‘In Progress’ or ‘Unapproved’ despite the Supplier having participated due to the in-action of Operator users. It can be this inaction that undermines the whole program.

• Scorecard results are not regularly shared with suppliers. Suppliers not having access to data that they add to the system and the reports being run on them is a key difference of the model that this client used versus other clients models. For most clients they allow the supplier to have access to run reports on the system data that they enter. This is often an additional selling point for supplier participation because many smaller supplier firms do not have their own systems to collate, store and report out on their own performance data.

• Suppliers are unclear of customer performance expectations – Suppliers have been asked to participate but they are unaware of the targets their performance is being measured against.

• There is little or no action or follow through that results from the scorecards. (i.e., suppliers do not see recognition, rewards, corrective actions, or disengagement as a result of their performance)

Given the above how can we move this project forward to ensure SPM System Implementation Success?

Sherry Gordon succinctly summarized the six key steps for a successful SPM implementation. Based on my experience I wholeheartedly agree with her assessment:

1. Management buy-in & support
2. Alignment with company and organizational goals and objectives
3. A good process in place
4. Communications: with suppliers and within your organization
5. Actions
6. Measurable results

Implementing Supplier Performance Management Systems. What are the barriers and steps to implementation success?- Part 1

The blog is lucky to have the input of SPM practitioniers to our content. This is the first in a 3 part series looking at barriers and steps to implementation success for Supplier Performance Management solutions.

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Recently I have been working with a client who has had an SPM system in operation for over a year and a half. The company is currently having difficulties fully imbedding the system within their organization and requested a meeting with me to look at this issue. They asked that I develop a presentation around one of the key questions I get asked “How do your other clients do this successfully and why is it not working for us?”

Having implemented SPM systems in many companies over the years I get asked this question on a regular basis. So here are my thoughts on why implementation may not have worked for this client in particular;

Firstly why was the SPM System Implementation not a “success”?

- They ‘bit off more than they could chew’ – The client tried to onboard too many suppliers, scorecards and internal users at once. A phased/tiered implementation model would have worked more successfully.

- Not all the relevant stakeholders were included and communicated with early enough in the process.

- Not using a robust model to handle the implementation – This client used only a centrally placed team to handle the implementation and this doesn’t work. A central team should coordinate the actions of ‘Champions’ at the local level who will work directly with the Operator Stakeholders and Suppliers to ensure buy in. This also relates back to point two regarding key stakeholders not being included in the process at an early enough stage.

- Too much complexity – Trying to overcomplicate scorecards by using too many metrics and asking the supplier respondent for too much complex data tends to lead to non responses. In addition too many access levels with similar permissions can lead to users over writing each others work also the complexity in set up it is confusing for users. Keep it simple.

- Too many custom scorecards/reports/Suppliers – Too many groups are using the exact same scorecards/surveys and instead of using the same template and disseminating it they are creating their own custom versions each time. This means essentially the same questions are being asked twenty different ways, diluting the value of the data and the ability to report at a global level. It also clutters the system, visually making it seem more complex than it actually is. Also Suppliers are just being added to the system randomly with no strategy behind their addition.