Whether you define supplier performance management (SPM) and supplier relationship management (SRM) differently, there is that one key component that holds them both parallel to each other—the supplier. And regardless of what initiation stage your company is at in the SRM or SPM process, the vote is unanimous—as presented at Loyola University Chicago’s Supplier Relationship Management Conference last month—that effective supplier management must start first with the right communication.
“As much as you think you are communicating with everyone, you can’t communicate enough,” explained Kellogg Co.’s Director of Supplier Relations and Diversity Cathy Kutch at Loyola’s SRM conference, in collaboration with the Chicago Quinlan School of Business. “Suppliers do really want to get involved in fixing issues within your organization. A lot of SRM is just about education and about having those conversations. Executives and companies tend to only think about their suppliers when an issue comes up. But suppliers cannot forever be helping you at the bottom line if you are not giving them the information they need at the top line.” Kutch further confirmed that the supplier cannot afford to miss a key discussion that can help them do better. “You want to put things together where the discussion needs to be had,” she explained. “And don’t worry about the format. Just provide your suppliers with an opportunity for them to talk and tell you what is going on.”
While there are all different levels of testing, compliance and performance measurement, a number of things can be done to benefit the supplier or vendor, in turn, benefiting the company using them, which include:
- Continuing to educate on the value of score cards to identify what suppliers have improved in their processes
- Enforcing “supplier days” to provide one-on-one discussions between suppliers, stakeholders and company executives
- Utilizing technology to ensure that suppliers get the information they need to effectively and accurately perform
Management at the dock
In the case of C3 Solutions’ C3 Reservations, the Web-based dock appointment scheduling solution includes a component to it which allows customers to measure their suppliers’ performance with respect to their purchasing agreement or merchandising policies. And while with a dock scheduling system, users should expect to measure “a supplier’s adherence to the actual delivery time because the system manages when they are supposed to arrive at the dock,” according to Greg Braun, Senior Vice President, Sales and Marketing, C3 Solutions Inc., there are other areas that the company manages based on customer request.
“A lot of times, our customers will come to us and say ‘my buyer wants me to measure whether the person at the shipping dock wrapped the product the way they asked?” explained Braun. “Or did they send the paperwork the way I asked? Is the labeling on the products the way it should be?’ So there is a whole list of factors to measure, such as if a product was damaged at the loading dock. And especially in the retail segment, there is post arrival data capture and some companies may enter that data into their WMS, but more often than not, it’s a stand-alone process where they enter that data into a spreadsheet or in a form that purchasing has given them to fill out.”
But while having a list of factors to measure supplier management against is a good initial step, it ultimately is not effective if such data is siloed and not shared with a business’s key partners to enable efficient performance across all spectrums of its supply chain.
“With an instantaneous data capture, you can resolve such issues right on the spot,” Braun continued. “In today’s world, people are trying to measure the performance of their carriers or vendors. They do that to a certain degree but it’s very labor intensive.”