Ten Valuable Metrics For Successful Supplier Management

Stringent global trade and product safety regulations have been increasingly enforced, driving organizations to seek absolute visibility across the supply chain. In efforts to ensure products are delivered on time, on budget, and within compliance, organizations are placing a greater emphasis on building stronger relationships with their suppliers. Supplier management, through the use of scorecards compiled with meaningful metrics, is becoming more necessary in order to increase relationships between buyer and supplier, improve supplier performance, and improve the customer's overall competitive market. By capturing the right data, encompassing the organization's quality and social standards, and extracting relevant data from a centralized repository, companies can utilize supplier scorecards to support better business decisions.

Compiling a list of essential performance metrics requires contribution from multiple groups across one's organization to ensure corporate standards for product quality, safety, and social compliance are properly attained. The elected metrics must be applicable across the entire supplier base: order accuracy, on-time delivery, quality, fill rate, and lead time variance are all prime examples. Each group within an organization works differently with their suppliers; sourcing teams collaborate on samples and costs and negotiate orders; quality teams ensure product is meeting quality and safety standards; and the supply chain and logistics teams follow up on a number of items, such as ASNs, carton labels, and scheduled ship dates. Collectively, all teams work meticulously to achieve one unified goal – to deliver quality product on time and at the lowest possible cost.

Continually developing collaborative relationships with suppliers based on shared goals and successes will ultimately lead to a jointly-favorable business relationship between buyers and their suppliers.