Overview Of SPM

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Overview of Supplier Performance Management

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Overview Of SPM

  1. 1. Overview of Supplier Performance Management By Biznet Solutions www.biznetspm.com
  2. 2. Supplier Performance Management (SPM) <ul><li>‘ SPM is the process of measuring and managing an organizations march towards supplier excellence, no matter how “excellence” is defined.’ </li></ul><ul><li>A process to manage suppliers, ensuring that the benefits and requirements identified at sourcing and acquisition stages are delivered throughout the life of the contract. </li></ul>
  3. 3. Supplier Performance Management Overview <ul><li>Supplier Performance Management is more than technology, it is about creating an all encompassing strategy where suppliers connect to your business in real-time </li></ul><ul><li>SPM allows insight into supplier behaviour; it is about gaining control of your company’s entire direct and indirect spending </li></ul><ul><li>SPM is about thinking global, not local </li></ul><ul><li>Supplier Performance Management is a vital element in an overarching procurement strategy </li></ul>
  4. 4. What are the business benefits of SPM? <ul><li>Increase the accuracy and availability of supplier information </li></ul><ul><li>Monitor, measure, report, and manage supplier performance </li></ul><ul><li>Align Operator and Service Company Expectations </li></ul><ul><li>Improve internal users’ compliance </li></ul><ul><li>Help design and implement process improvements jointly with suppliers. i.e. sharing best practices </li></ul><ul><li>Reduce costs for all parties involved </li></ul><ul><li>Facilitate joint product-development projects with suppliers. </li></ul>
  5. 5. Supplier Performance Management Facts <ul><li>Best practice companies invest in Supplier Performance Management </li></ul><ul><li>World class companies measure ROI on these resources </li></ul><ul><li>Simply measuring supplier performance results in improvement </li></ul><ul><li>Companies get full value and reduce risks by turning performance metrics into a performance improvement strategy </li></ul>
  6. 6. The Role of SPM <ul><li>Helps companies focus resources on proactive, value added activities instead of reacting to supplier performance-induced problems (i.e., defects, expediting, excess inventory, late deliveries to customers, work stoppages, reduction to market competitiveness, etc.) </li></ul><ul><li>Enables firms to find and remove hidden cost drivers </li></ul><ul><li>SPM provides a system to manage contractors and ensure that the benefits and requirements identified at sourcing and acquisition stages are delivered throughout the life of the contract. </li></ul>
  7. 7. Supplier Performance Management Today <ul><li>Most companies measure less than half of their suppliers and do not have the ability to measure them consistently </li></ul><ul><li>Most companies are not satisfied with their ability to measure supplier performance </li></ul><ul><li>Most companies are challenged by both developing meaningful metrics and turning into actions that improve supplier performance. </li></ul>
  8. 8. Empirical evidence suggests a direct relationship between supply chain “glitches” and stock price performance Is the Supply Chain Important? “ Quantifying the Impact of Supply Chain Glitches on Shareholder Value,” by Prof. Vinod Singhal of Georgia Tech, 2003
  9. 9. Is the Supply Chain Important?
  10. 10. Value Proposition for SPM <ul><li>Evaluate suppliers </li></ul><ul><li>+ </li></ul><ul><li>Uncover hidden cost drivers & risk </li></ul><ul><li>+ </li></ul><ul><li>Find quality & performance improvement opportunities </li></ul><ul><li>= Develop Supplier Relationship </li></ul><ul><li>= Reduce Risks </li></ul><ul><li>= Reduce Supplier Costs </li></ul>
  11. 11. Measuring the ROI from a SPM Strategy
  12. 12. Alignment of SPM <ul><li>Corporate goals & strategies </li></ul><ul><li>Procurement strategies </li></ul><ul><li>Performance expectations </li></ul><ul><li>Value of the relationship </li></ul><ul><li>Business ethics </li></ul><ul><li>Standards of excellence </li></ul><ul><li>Commitment to continuous improvement, lean </li></ul>Procurement to Corporate Alignment Customer/Supplier Alignment

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