Ariba Knowledge Nuggets: Supplier Management Challenges Part 2
Ariba Know ledge Nuggets Building a Successful Supplier Management Program—Part II Supplier Programs: Typical programs have different levels for supplier participationWhile naming conventions may vary, programs typically cover three major suppliersegments or tiers: Strategic Suppliers(1-5% of supply base Representing much higher % of spend) 1-5% Preferred Suppliers (3-10% of supply base representing significant % of spend) 3-10% Other/ Transactional Suppliers (85-90% of supply base 85-90%representing low % of spend, but often high # of transactions) Supplier Tier Determines ComponentsSTRATEGIC• Executive sponsors at both buyer and supplier organization• Monthly and Quarterly meetings• Robust scorecards evaluating both supplier and customer performance against objectives• Joint teams working on site at customer; often difficult to know who is supplier and who is customer team member• Individual performance goals on both sides include metrics evaluating output/ performance of collaboration efforts• Cost sharing/ gain sharingPREFERRED• Sponsors at senior level in organization; may or may not be executives• Quarterly or bi-annual meetings• Robust scorecards evaluating supplier performance against objectives• Cost management goalsOTHER/TRANSACTIONAL SUPPLIERS• May or may not have scorecards and metrics in place, depending upon resources available to support program and value to be derived• Historically this category of supplier has been overlooked due to the investment required, with the advent of technology to automate the program, we expect to see more of these suppliers brought on board to client programs
Implementing a Best-in-Class Supplier Management program1. Solidify sponsorship of internal champions and executives2. Establish robust supplier on-boarding and information management process3. Determine Supplier Segmentation Model (i.e. strategic, key, transactional) • Select a pilot organization and pilot suppliers and understand what is currently being measured4. Pilot specific categories and/or supplier tiers5. Define the process for gathering and reporting scorecard results, and managing supplier performance6. Automate Contract Management process to drive compliance7. Solidify metrics (including data sources and calculations) • Establish key performance indicators (KPIs) • Define scorecard and survey questions and templates8. Analyze results and communicate to suppliers9. Collaborate with suppliers to improve performance • Greater volumes • Global economy • Revenue generation & acceleration • Cost containment • Compliance All of these impact and are impacted by risk management policies Technology, Capabilities, Content and Community all play a critical role in structuring an effective Supplier Management Program
Where Does Your Organization Fall?Take our poll on the Customer Success Group page in Ariba Exchange!
HAVE YOU JOINED THE CUSTOMER SUCCESS GROUP PAGE ON EXCHANGE YET?As your partner in success, we believe this group is a great place for you to meet and network with other Ariba customers who, like you, rely on Ar- iba solutions to drive their organizations goals. Since we already know of many of the innovative and exciting things you are doing, we think it is time for you to share with others! Of course, you may also find the group to be a great place to learn from others as well.The Customer Success group is for Ariba customers only. This is YOUR group. We encourage you to ask questions, share ideas, post best practice tips, etc. We will do the same. As you explore the site you will find a weekly Tip of the Week, a customer reference calendar, replays of our Cus- tomer Success Lunch n Learns, archived Ariba Knowledge Nuggets, upcoming events.....and much more. We also want your feedback on the site and how we can improve it. We are sure you like what you see, but more importantly we hope the site will help you drive greater adoption, compliance, ROI, and savings targets. We look forward to seeing you there!