How can you integrate contract performance monitoring into your procurement strategy?

2 Establish a CPM plan and team

A CPM plan is a document that outlines the roles, responsibilities, activities, and tools for monitoring and managing the supplier's performance. It should include the KPIs, the performance targets and thresholds, the reporting and feedback mechanisms, the escalation and resolution procedures, and the incentives and penalties for performance. A CPM plan should be developed in collaboration with your suppliers and communicated to all relevant stakeholders. You should also assign a CPM team that will oversee and execute the plan and liaise with the suppliers and internal customers.

3 Conduct regular reviews and feedback

The CPM plan should specify how often and how you will review and evaluate the supplier's performance. This can be done through periodic reports, audits, surveys, site visits, or meetings. The purpose of the reviews is to compare the actual performance with the expected performance, identify any gaps or issues, and provide constructive feedback and recommendations for improvement. You should also recognize and reward good performance and apply corrective actions or sanctions for poor performance.

4 Manage changes and disputes

CPM is not a static process, but a dynamic one that requires flexibility and adaptability. Changes in the contract scope, specifications, deliverables, or deadlines may occur due to various factors, such as market conditions, customer needs, or supplier capabilities. You should have a clear and agreed process for managing and documenting any changes in the contract, and ensure that they are reflected in the performance measurement and management. You should also have a fair and transparent process for resolving any disputes or conflicts that may arise from the contract performance or changes.

5 Learn and improve

The final step in CPM is to learn from the results and feedback, and use them to improve your procurement strategy and processes. You should conduct a post-contract evaluation to assess the overall performance of the supplier, the value and benefits of the contract, the lessons learned, and the best practices. You should also solicit feedback from your suppliers and internal customers on how to improve the CPM process and collaboration. You should then use this information to inform your future procurement decisions and actions.