Keep your suppliers hungry by including performance based parameters within your supply chain contracts. For tips, check the attached slide.

1. Crescendus™
Tip of the Day: June 23, 2016
© Crescendus™ 2016. All Rights Reserved.
www.crescendus.com
SUPPLY CHAIN PERFORMANCE TERMS
Do not give blanket commitments to your suppliers (e.g. x amount of volume at
y prices). Instead, focus on contract terms that include a combination of set
minimums and performance based parameters. Set minimums could include
commitments of set order volume within a pre-determined time window, while
performance based parameters may include quality, timely delivery, pricing
accelerators and new efficiency improvements. Your supply chain contract
should always include performance parameters, which if they are successfully
met, could trigger new set of volume orders for the suppliers (on top of the set
minimums). This will keep the suppliers hungry and will make them more
receptive to your business (& not forget you once the contract is signed).