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:
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;
Our latest white paper is based on these 5 areas of pain and hopefully share with you soon.
I have been reading numerous supply chain resources about the problems encountered when managing `too many suppliers`.
Whether you call them vendors, suppliers; partners or strategic alliances you only ever need to have enough to satisfy your organisations operations. With the current economic climate a lot of people are looking to trim the fat along their supply chain. One huge risk is an operation unnecessarily removing key value-adding suppliers, potentially destroying strategic relationships and jeopordising their supply chain.
Unless you have over-shot the number of suppliers it is more than likely that `too many suppliers` means that they are not performing and thus are too expensive. The answer? A Supplier Performance Management approach to develop better performing working relationships.
With a supplier performance management practice the problems of `too many suppliers` can be eradicated. Using reporting tools to capture live data measured against strategic KPIs an organisation will remove ineffeciences along their supply chain.
What would you rather have `too many suppliers` or `excellently performing suppliers`?
This past week we conducted our first SPM webinar.
The webinar; `Fundamentals & Principles of Supplier Performance Management for the Oil & Gas Industry` went extremely well. Through our various marketing channels we were able to attract a vast array of attendees. One thing that struck me was the diversity of our audience and this once again reinforced the broad appeal of SPM. Even though this webinar was specifically oil & gas we still had utility and pharma professionals interested.
In fact it was this diversity that has led us to announce our second webinar, a demo of our SPM tool PerforMIS for all industries. I hope that this first webinar has served to interest a lot of professionals from various fields to acknowledge the diversity of an SPM approach.
The webinar was also great for highlighting the expertise and skill of our team. They were able to skillfully deal with attendees questions and we hopefully have done a good job in following up and making sure all attendees questions were addressed.
All in all, this event is hopefully the first of many for Biznets SPM series. As always check out the website http://www.biznetpm.com for news on upcoming events. Furthermore if you are interested in viewing the event then just contact me at email@example.com for a copy.
It is of great interest that I am watching the events ongoing in India regarding the shambles surrounding the preparations for the upcoming Commonwealth games. A lot of these issues have come down to, from my perspective, mismanagement of suppliers.
Supply Management have highlighted the problems. You can read that article here. Amongst the mis-management which have included amongst other things incorrect concrete have contributed to the project putting the games in doubt.
There is no doubt that for major events like this that rely upon a tendering process to deliver. Clearly the supplier selection and performance management process has fundamentally failed. When the poor performance from management to suppliers fundamentally put into jeopardy a major international sporting event a lot of questions have to be asked.
I hope that it gets sorted but let the on-going crisis in India serve as a warning to the dangers of failing to manage your suppliers.
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.
The first in a series of SPM webinars are being launched by Biznet Solutions.
Biznet are widely regarded as having the most experienced and qualified team in helping organisations implement their SPM systems. Biznet has been fortunate enough to work with some of the largest companies in the world with their Supplier Performance Management tools.
Now, for the first time, they will be providing a free insight into SPM and its fundamentals. The first in this series will look at the oil & gas industry. Biznet has a number of industries at its heart; energy; utility, pharmacuetical & logistics.
Biznets Daryl Fullerton will be hosting the event and answering your questions.
This is a great event to attend and to get greater insights into the workings and practices of a pure SPM tool and methodology.
You can register here
Much to a discerning SPM practitioners displeasure, excel spreadsheets have continued to be used by leading organisations to collate and manage data.
Excel, a tool built for individual usage with limited data has found itself struggling under the weight of whole organisations data. Furthermore its basic analytical tools are being stretched as it is bombarded with heavy, manual, raw data. This must end.
Excel is a fine tool for domestic use, managing accounts or shopping lists but has no place in modern day business storing data.
Lets have a quick look at Excels core weaknesses;
There are so many drawbacks against using excel. So many of these are apparent to organisations yet they continue to utilise them out of habit.
Break the habit and get business smart. Data measurement and management is such a key element to managing performance that one cannot rely on excel.
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.