Do you know which supplier of yours is reliable and diligent?!
Suppliers are the key to your success and identifying the champions is no easy feat but critical. Hence gaining supplier insights such as supplier: performance, risk, spend, compliance is essential to evaluate. These insights will eventually help decision-makers pinpoint their key suppliers with ease.
According to a finding in the 2020 WBR (Worldwide Business Research) insights report, “The top concern for procurement professionals is making buying decisions without the necessary insight” which further emphasizes the importance of supplier analytics.
From your experience, you already understand the complex nature of the global supply chain and the challenges it poses to an organization’s procurement department. And these challenges do not discern between large or small enterprises at all. Though they may vary in structure, if they are in the same line of work and working with similar suppliers, then they share uniform pain points.
Good supplier relations don’t always equate to a good supplier! They may be great in their words however lack the materials or quality they promise to provide. This works exactly in parallel with how your organization analyses your supplier base. Have you ever framed agreements, looked at unreliable spend data, evaluated siloed processes, made gut purchases? All these barriers stop you from building good buyer intelligence.
So how do we find out which of our suppliers meet the criteria to be the “BEST”?! And how can we better identify and leverage these suppliers to build value?
Finding the best out of your supplier base is highly subjective and relative to your or your team’s own experience, function, role, and relationship. Hence putting aside all bias, it’s important to set up criteria of requirements the supplier must possess in order to be validated and trusted.
Let me re-emphasize SUPPLIER ANALYTICS ARE IMPORTANT TO MAKE BETTER DECISIONS!
Now to begin with we must discuss the evaluation criteria on which all suppliers are judged. This framework will work wonders now and in the future to centralize and streamline the process.
Better Supplier Evaluations = Better Procurement Intelligence
So what if the manager asks which local supplier is the quickest to supply printed books? Or which supplier has the highest spend in the transformers category, and performs very well too. Would you be able to answer instantly? Would you also be able to point out the supplier with the highest risk?
Are you thinking about your answers? Can you easily point out how this information is accessed? If your answer is YES then you are on the right track, however if your answer is NO then we need to have a small talk.
Your team may scroll through pages and pages of supplier lists, trying to remember which one delivered on time, which one had top notch quality, which supplier had a proper contingency plan set in place, etc etc. All your data will be accessed by many team players with different perspectives and opinions. In the end you will get a confused answer without a beginning or an end. Hence the question lies, are you building procurement intelligence & insights that are driving supply chain performance forward, or are you simply reactionary in the way you obtain and utilize your supplier data at hand?
Supplier evaluation should be an automated solution with a clear cut evaluation framework based upon the criteria your team sets out, and continuously improves, because that creates the right kind of procurement intelligence.
There are 3 things you need in order to modernize supplier evaluation, and truly gain data-driven buyer insights, and those are as follows:
- Clear KPIs / Supplier Evaluation Criteria (the What)
- Find the right Data Sources (the Where)
- Build Business Intelligence (the How?)
Here’s a quote from an award-winning journalist for you:
“Having a formalized system in place to track and evaluate supplier and vendor performance is essential to the smooth operation and profitability of your company” (Carrolyn M. Brown, 2010).
Therefore your number one priority should be formulating an evaluation criteria!!!!
Let me help you out here: To start developing supplier performance criteria you need to take into account KPIs that will access various stakeholder disciplines as they are the key to your business success. The important part is to evaluate suppliers performance in order to deepen sourcing and gain procurement insights. Combining the goals and needs of all departments within your organisation guarantees that everyone is on the same page moving forward.
At Waasla, we believe in a thorough supplier performance review based on our core values. These few performance variables have been set in stone by us:
- Cost Variables
- Quality Variables
- Service Performance
- Supplier Profiles
- Risk Variables
All these variables can be further expanded according to your business requirements, and supplier category relevance to make sure you are comparing the right type of suppliers to each other and not Samsung to Sephora!
Look out for the detailed blog on supplier performance variables.
