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 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.
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;
- 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.
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.
How do you capture supplier metrics?
You can vote here.
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
6. Measurable results
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.
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.
Does this data surprise you?
Nowadays cost appears to play the most significant role in persuading organisations to part with their cash; regardless of how good the software is. Therefore it is important to note that Supplier Performance Management solutions can have a significant impact in reducing cost and improving ROI (Return on Investment).
An SPM process encourages continuous improvement. The data generated is never static but instead provides an opportunity to uncover problems and areas of opportunity. Uncovering supplier issues can lead to `dis-engagement` but on a far more common scale leads to improved relationships.
Through SPM there are so many by-products that will help develop successful supplier relationships:
- Approved supplier list
- Supplier awards
- Evaluation of `lean` practices
- Operational performance reviews
These factors all encourage improved supplier performance. Furthermore by addressing areas of improvement and cost reduction bottom line savings will increase.
Another area of saving is analysing the cost of a failed supplier relationship or base. The cost of failure is one that is usually overlooked. However it has the potential to cause serious supply chain problems that damage your companies corporate image and risk strategic vendor relationships.
Another way to approach the subject of ROI is to visualise your organisations current spend dealing with poorly performing suppliers. Every resource, money, time etc spent is costly and reducing ROI on the initial investment.
I recently have been reading a number of academic articles & papers based on Performance Management. There is a wealth of theory and SPM expertise out-there for the lay-man to learn-more.
`Responsiveness of the supply chain does not depend solely on the single organisations performance but on the suppliers performance as well`
(Wong and Wong, 2008)`
The research for the recent webinar series has involved a lot of exploring the supply chain material that provides the fundamentals of SPM. For many of those interetsed in SPM the first question is often,
Well the following five areas of pain identify drivers for SPM implementation;
- Poor supplier performance visibility
- Developing Key Performance Indicator metrics
- Timely access to performance data
- Ability to generate presentations for performance reviews
- Communication with suppliers
Our latest white paper is based on these 5 areas of pain and hopefully share with you soon.