A solid supplier scorecarding program can drive big cost savings in the supply chain. Executives know that clear performance metrics are the starting point for supplier management.
Yet many companies find data management and sharing a roadblock. Through our work with customers, we’ve identified seven key attributes of better scorecard programs.
Segment your scorecard.
You can’t use a one-size-fits-all strategy for scoring supplier performance. Performance varies across supplier types. How you respond should match the supplier’s strategic value and your available alternatives. Because it’s impractical to treat every supplier uniquely, organizing them strategically and creating differentiated strategies is more effective.
Set a high bar for data relevance.
Limit your KPIs to 10 to 15 and establish supplier relationship management strategies for KPIs ahead of time. Ideally, your scorecard will encompass supplier quality and risk dimensions.
Use an Advanced Information Hub.
Consider using a BI platform to run your scorecarding program. These systems include the needed data governance, data cleansing and reporting capabilities. Look for a system that combines BI, collaboration and mobility into an Advanced Information Hub.
Add data visualization.
Static reports give the necessary information for busy buyers and reps. But these reports often fail to communicate the key dynamics that are impacting performance. For example, displaying OTIF rates over time as spend increases, via a trend chart, is more effective for understanding how well a supplier will scale to your needs.
Secure collaboration portal.
Communicating with suppliers cost-effectively requires a portal with appropriate data security levels. These portals can be enhanced with scheduled reporting and alerts.
Predict supplier behavior.
A historical view of supplier performance is good for evaluation but not actionable. A better scorecarding program will use predictive analytics to anticipate changes in risk and performance in the future. What is the probability that a smaller supplier who has recently won more of your business will deliver for a major product launch? Minimizing supplier disruption is central to optimizing your supply chain.
Use mobility to increase adoption.
Finally, strong programs move beyond static reporting to make it easy for every stakeholder to retrieve their information. Portals and mobile apps that deliver scorecards with at least one level of drill down to KPIs can enable users to collaborate and respond more quickly and effectively.
Many companies fail to scale their supplier scorecarding initiatives. Often the major hurdle lies with managing data and delivering relevant insight to guide performance feedback. By deploying new technology and best practices, companies can re-invigorate their programs and scale to larger numbers of suppliers.