Avoid Six- and Seven-Figure Costs: Improve Supplier Management

The fragility of global, extended supply chains can be offset, however, by use of “supplier performance management” practices, as indicated by the supplier on-time delivery and first-time fill rate results reported by the most successful companies surveyed.

The Aberdeen Report finds that companies not yet at the top of the heap in terms of supplier management are planning to join that best-in-class group in the next year or so. Aberdeen’s research suggests that those companies who wish to succeed in minimizing supply chain disruption by maximizing control over supplier management would do well to consider measuring supplier performance far more frequently than just every quarter; track supplier key performance indicators in more granular detail; examine their own practices for operational defects that hinder supplier performance; “link to customer-facing metrics.”

Possibilities for improving performance measurement through collection and analysis of data depend heavily on implementing appropriate software: Event management and decision guidance systems, business process management solutions, and inserting technological “control points” earlier in the supply chain are all suggested as methods of improving overall supplier management strategy.

For more information on the report, visit http://www.aberdeen.com/summary/report/other/SuppPerf_093004a.asp.

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