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.
I have just finished reading an article that dealt with removing risk from the supply chain.
I inherently disagree with the attitude that risk can be totally removed . I feel that risk can NEVER be truly accounted for or made into a non-factor. To start with I dont think I would want to consider a supply chain without risk; how boring?!
Risk is not necessarily a bad thing; risk reaps rewards and risk scares vendors and operators to always strive to improve. If there was never any risk, then our supply chain processes would become lathargic and lack dynamism.
I feel that risk needs to be measured so that you can best manage it. Managed risk is not a risk-free supply chain. A rigorous risk management solution allows you to measure risk so that you can best manage any issues along the way.
Measurement in this sense refers to better managing the activities and performance of your suppliers. The vast majority of risk comes from trusting suppliers to add a stated value to your product or service. Therefore to ensure that your suppliers & vendors are complying a performance measurement system provides a real-time safety net.
Supplier Performance Management has elements of supply chain, SRM & certainly risk management in its core. Performance management of suppliers allows users a degree of control over risk. As mentioned, no supply chain can ever be risk-free. A risk management system will not allow for a company to legislate for a tornado or machinery failure. But, failure to measure vendors performance along the supply chain greatly increases the risk of mis-management.
Supplier Performance Management delivers improved SRM and supply chain performance. Improved performance doesnt guraranteed reduced risk however the reporting and real time data analysis that an SPM provides ensures that early-warning signs can be addresses.
This mornng there is a great article on the Supply Management site that highlights the strategic importance of managing key suppliers.
You can find the link here;
The article stresses the importance of developing key strategic realtionships within the specific market; in this instance the market is fruit & vegetables.
SPM can play a major role in helping organisations manage these key suppliers to eliminate waste and drive greater effeciency. Supplier reporting encourages increased ownership and visibility along the value chain.
By recognising the value of continous improvement through analysing strategic performance you can create great supplier relationships.
Performance monitoring of suppliers allows for strategic suppliers performance to be analysed; thus reducing risk and driving continuous improvement. Regardless of the industry in question, SPM can play a major role in delivering long term value.