Since introducing our 3D Performance Management Whitepaper, we’ve been talking a lot about the ways firms can look to improve the way they connect and engage with their suppliers. You can read some of our recent articles here and here. Today we’ve compiled a brief 7-point checklist that procurement teams can refer to when it comes to setting the groundwork for the next generation of collaborative supplier performance management practices.
Building an inclusive Shared Vision allows both the buyer and the supplier to understand each other’s strategic goals and motivations. This clarity helps firms gain insights into each other that are vital for creating a mutually beneficial, collaborative buyer/supplier relationship. It’s imperative to understand that your suppliers have business objectives and strategic goals to achieve as well. By working together you can ensure the ongoing success of both businesses.
Buyer/Supplier relationships should be established against aspirational top-level metrics that measure performance in a way that aligns with the strategic objectives of both businesses. These metrics should be directly linked to corporate objectives, not procurement objectives. Think ‘increased profitiablily’ not ‘increased cost savings’. Once this is achieved, a hierarchy of metrics with clear causalities between such top-level metrics and more tactical performance indicators should be created.
Looking at the scope of work as a series of processes designed to deliver positive outputs, rather than a list of disconnected transactions, will provide far greater insights on the overall state of the relationship.
Developing a meaningful Relational Performance framework which mirrors the values and behaviours identified as key success factors by both buyer and supplier organisations, is critical to success in a commercial relationship. Keep in mind that your partnership governance should clarify the ownership of performance management areas upfront as well as performance calculation, tracking and reporting activities and their frequency. Remember, it’s people, not processes, that make decisions and hence your relationship should be structured accordingly.
Developing a Shared Vision, will ensure that both firms are thinking towards the future. While metrics and measurements are critical to understand how the relationship has performed in the past, a clear vision of the future is critical for ongoing relational success. Ensure that your Transformational Performance frameworks embed measures which allow you to assess your innovation agility, change excellence capabilities as well as the overall value and consistency of your pipeline.
Embedding operational, relational and Transformational Performance dimensions into a holistic ‘3D Performance Dashboard’ which embraces all critical measures will keep your businesses on the road to drive success.
As the way to empower 3D Performance Management by setting the right targets, capturing data-driven measures at performance delivery points, engaging key stakeholders in performance management activities and following-up on collaborative improvement plans.
Published December 2015
