What is supplier development? There are various definitions about this term that have been brought up by different persons from time to time. Here they are –
“A long-term cooperative effort between a buying firm and its suppliers to upgrade the suppliers’ technical, quality, delivery, and cost capabilities and to foster ongoing improvement.”
“Any effort of a buying firm with its supplier(s) to increase the performance and/or capabilities of the supplier and meet the buying firm’s short – and/or long-term supply needs.”
This means that supplier development is a proactive business process that promotes ongoing improvements intended to benefit both buyers and suppliers. Supplier development focuses on long term improvement in a systematic way to attain sustained performance.
Why should you track a supplier’s performance?
You may question why a supplier’s performance must be tracked and measured. This is because measuring suppliers will only have them to improve, and most importantly you can’t manage what you don’t measure. Tracking their performance will also help you get rid of any hidden waste and cost drivers in the supply chain. Moreover, you can also increase competitiveness by reducing order cycle times and inventory levels. All this tracking will help you make informed business decisions effectively.
How can you track the performance?
Every business has their own set of methods that they use to track performance. Some of the most common methods used are mentioned below.
- Establish performance indicators and align performance goals
- Classify multiple suppliers and vendors
- Devise an evaluation method and design a robust assessment system
- Deploy the system and give feedback
- Come up with results
- Maintain good relationships with the most appropriate and cut loose weak links
Factors that make supplier performance management a success
Supplier Performance Management (SPM) contributes to the value creation and control supplier risk for your company. SPM is a continuous improvement process that needs to be run in a step-by-step way as described above.
- Have an effective yet simple evaluation model that covers five critical areas of safety, quality of goods, logistic of delivery, quality of services and continuous improvement. Provide a rating from 1 to 5 for continuous improvement.
- Make sure to involve your team of buyers as nothing is possible without their alliance.
- Involve your internal customers to evaluate each supplier whose goods and services they use.
- Also involve your suppliers and engage them to self-evaluate and be proactive in offering their ideas for improvement.
- If your company has a quality manager, rely on him as he will be able to support your approach.
- Organize an annual supplier event where you can recognize the contributions of your best suppliers and reward them.
Jayem Logistics is the best integrated supply chain player that will stand strong in every aspect of your assessment and performance testing. We have proved to be a trusted logistic solution for all our clients since the past 30 years to serve every warehousing and distribution need of theirs.