THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
If you want more from your suppliers, you need to change the way you measure their performance. While metrics cannot in and of themselves transform relationships, they play an important role in determining the way a company works with its suppliers and, in turn, the value it derives from them.
At many companies, however, performance monitoring has become an end in itself. Huge amounts of time are invested in gathering data to fill reports that, ultimately, deliver little in the way of insight. Faced with an overload of more easily obtainable and largely operational metrics (costs, parts per million defects rates, response times, and so on) managers overlook more challenging areas, such as the quality of relationships with suppliers. While there is no ideal set of generic metrics, the author proposes a balanced scorecard that takes a broader view of supplier performance, taking in not only operational performance, but also strategic and financial value, and relationship quality - "how we are working together" rather than "what we do".
Examples of the former include the degree of trust and mutual understanding, and the number of cross-company staff rotations.
