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Managing Strategic Supplier Performance

Our work with larger companies managing their strategic suppliers

Case Study

This “case study” is an amalgam of our experience working with large companies to assess and manage their ‘key’ suppliers. By key suppliers, we refer mostly to a relatively small group of suppliers providing strategically important good and services.

This case draws on our work in the USA, UK and Australia with direct and indirect suppliers.

The Brief

Our Client, a large and well known company wanted help to assess the performance of their key suppliers. The group of suppliers to be assessed is critical to the business - providing essential services which make a significant contribution to the growth and profitability of the company.

The Client had in place a Word & Excel system to conduct supplier assessments twice a year, and a laborious manual process to analyse the data, to create and share the reports and to identify actions to improve supplier performance. They were not happy with the existing system and knew they should invest in better skills and technology to save time, lower costs and get better results.

The Issues

During the meeting we fleshed out the issues with the current system. They included:

Poor Scorecards – They were not confident that the assessment scorecards they had been applying were best-practice. And the process to develop scorecards was a bit ad-hoc

Low Response Rates – The response rate to the assessment questionnaire was always low, only around 30% of respondents completed the assessment surveys.

A Slow Process – It took weeks to send the survey by email and manage non-respondents to achieve that modest 30% response rate.

Lack of Trust in the Data – There wasn’t a lot of confidence in the survey results – perhaps because the response rates were low, the scorecards were weak, the analysis and reporting was limited and the time lag between data capture and reporting / action planning was extended - there was little interest in the assessment findings.

Data Capture is Difficult – The assessment survey instrument was poor. The Excel spreadsheet system made it difficult to complete surveys.

Data analysis is Rudimentary – While analyzing a single survey took weeks, analyzing historical data to produce trend reports, for example was next to impossible. ‘Slicing and Dicing’ the data to respond to ad hoc queries was extremely difficult and slow – which further eroded confidence in the system.

More sophisticated analysis & reporting was impossible – meaning the project team could not produce benchmark reports, trend analyses, or comparisons using variables such as country, region, business unit/division, spend category, etc.

The Solution

We developed a proposal for the client outlining our approach to provide them with a better package of software & services. The proposed solution highlighted:

A Scorecard Workshop
We facilitate Scorecard Workshops which help clients review their existing assessment scorecards and develop best-practice templates. These workshops usually take a ½ day and an essential first step to a better supplier assessment program.

Client Set-up and Administrator Training
We work though an internal set-up process with new client engagements and provide Administrator training. Typically, that’s the manager who’s been working on the existing system. Training can be person-to-person and/or via phone, email and utilizing our Administrator Portal, Guru Blog.

Email Survey Management
We offered to manage the process to write an email, include a link to the survey instrument, clean the recipient list, send the email blast, manage non-respondents and close the assessment window. We’d report on our progress with regular updates.

Data Analysis and Reporting
This is one of the key steps in the process and it’s where we can add considerable value. We know the full capabilities of the software and can help with data analysis, report design and report generation. In this case, we recommended a suite of reports, based on our understanding of their specific supplier management issues.

They included:

Gap Reports – highlighting differences in perceptions of performance
Comments reports – to capture qualitative feedback
Individual Assessor Reports – to identify patterns in assessment
Location Reports – to review performance across territories

Relationship Action Planning Meeting
The Relationship Action Planning Meeting is the focal point of the vendor performance management cycle. It should be viewed as a vital link in the annual strategy and execution process.

We recommended a ½ day international teleconference meeting with all the key stakeholders attending to identify key actions to better manage the key supplier relationships.

Project Review
We like to participate in a project wrap-up meeting where we review each step of the process and agree on what we can do to improve the next review project.

In this case, we were expecting to identify further efficiencies in the process and to clearly identify the focus of the first tracking assessment (following the initial benchmark).

The Results

The project wrap-up focused on the results, which included:

90% response rates - the response to the first assessment survey was above 90%, a huge lift from previous response rates
A Better Assessment Scorecard - the client team recognised the improvements to the scorecard and attributed the higher response rate, in part to this feature
A Faster Deployment Process - the process to deploy the scorecard was dramatically faster than in previous years, with far less call on internal head hours as well
Insightful Reports - the visual appeal of the reports, in this case delivered as emailable PDF files was much higher than previous and that, in part led to greater engagement with stakeholders and better communication of the results
Improved Stakeholder Buy-in - improvements across the board led to greater levels of engagement from stakeholders and higher levels of satisfaction with the process
Deeper Understanding of Supplier Performance - this was the most important benefit of all. Sure the administration was improved but clients pay to secure for a better understanding of supplier performance.