SUPPLIER PERFORMANCE MANAGEMENT

In terms of supplier performance management, organisations support the continuous improvement by holding the suppliers accountable for poor performance where they do not process the payment for under shipment, over shipment and non-conforming items. Organisations have a right to acquire substitute or replacements items from one or alternative sources.

To enable truly effective performance management, the resulting relationship agreement elements must be captured and presented in an integrated fashion. This is typically accomplished by creating a performance map that outline what the supplier is truly accountable for and what specific steps must occur as consequences and using performance map ensures that all parties involved in the relationship understand how performance will managed and who will manage it.

 IMPORTANCE OF CONTRACT MANAGEMENT

Organisations in both public and private sectors are facing increasing pressure to reduce cost and improve financial and operational performance.

New regulatory requirement, globalisation, increases in contract volumes and complexity have resulted in an increasing recognition of the importance and benefits of effective contract management.

The growing recognition of the need to automate and improve contractual processes and satisfy increasing compliance and analytical needs has also led to increase in the adoption of more of software contract management procedures and increase in the availability of software applications designed to address these needs.

It is worthwhile noting that contract management is successful if:

The arrangement for service delivery continue to be satisfactory to both parties, and the expected business benefits and value for money are being realised

The supplier is co-operative and responsive

The organisation understand its obligations under the contract

There are no disputes

There are no surprises

A professional and objective debate over changes and issues arising be had efficiencies are being realised.

 ORGANISATIONS HAS TO DO A PERFORMANCE EVALUATION

Supplier evaluation is a continual process within purchasing department and form part of the pre-qualification step within the purchasing process; although in many organisation it includes the particular input of other departments and stakeholders. Enterprises has to evaluate in a form questionnaire or interview, sometimes even a site visit, and includes appraisals of various aspects of supplier’s business including capacity, financials, quality assurance, organisation structure and processes and performance. Based on the information obtained via the evaluation, a supplier is scored and either approved or not approved as one from whom to procure materials or services. In many organisations, there is an approved supplier list to which a quailed supplier is then added. If rejected the supplier is generally not made available to assessing company’s procurement team. Once approved, a supplier may be re-evaluated on a periodic, often annual basis. The on-going process is defined as supplier performance management. Regardless of the frequency for collecting supplier performance, organisations SPM should allow purchasing department to take a complete view of the how supplier is performing based on the criteria they require, but also isolate individual metrics the department have defined to hone in on.

 ORGANISATIONS SHOULD USE A PROGRAMME FOR LONG-TERM IMPROVEMENT

Enterprises should use a programme for long-term improvement through constant supplier collaboration, supplier relationship management programs aim to deliver incremental short and long-term value with suppliers. Suppliers are proactive engaged to exchange information and ideas on a regular basis and suppliers became more accountable and consistent in providing higher quality services. Value continues to grow after the contracted savings stage, with suppliers making important contribution to the company beyond the original contract scope. Enterprises SPM should provide the means to track and document supplier performance based on the metrics. From reusable out of the box metrics to define specific metrics values using calculated metrics, SPM provides the means to improve supplier management by making supplier performance as simple or complex as you like. Which render in to an effective partnership is formed.