Supplier performance management (SPM) is a business practice that is used to measure, analyze, and manage the performance of a supplier. Done successfully, this can help your company cut costs, alleviate compliance risks and drive efficiencies in your workforce management.
This important business function is associated with third-party management, and is often used in conjunction with an outsourced partner such as a managed services provider (MSP).
It can cover a wide range of areas in which your business uses suppliers, such as paper, IT or your phone provider. In this blog, however, we will be focusing solely on how SPM can be used to help manage your company’s internal and external (contingent) workforce.
What is the importance of supplier performance management?
With companies engaging a greater number of suppliers, and suppliers becoming increasingly important to an organization’s overall strategic and financial results, supplier performance metrics are becoming increasingly important.
That’s where a supplier performance management strategy comes in. By evaluating and comparing supplier performance, you’ll be able to ensure you keep the best suppliers, while eliminating suppliers who fail to comply with your requirements.
Not only that, but supplier performance management also allows suppliers to fully understand your company’s needs and expectations. This means that suppliers can grow with your company, providing exactly what you need at any given moment.
The ultimate intent of an SPM strategy is to identify potential issues with your workforce suppliers, and their root causes, so that they can be resolved as early as possible to everyone’s benefit.
What measurements do you need to include for workforce SPM?
Supplier performance is crucial for the success of your company. It’s important that your organization makes sure that suppliers meet your requirements if you are to achieve yearly targets and continue to grow.
Through the creation of a supplier performance management strategy, your company will be able to manage its supplier relations with a consistent, objective and analytical approach that puts informed decisions at the forefront of your supplier choices.
Supplier performance measurement generally includes tracking and evaluating the following key performance indicators (KPIs):
- Social responsibility
What are the benefits of supplier performance management?
By implementing a supplier performance management strategy that includes the KPIs that are relevant to your organization, your company will realize a number of key benefits. Here are just a few of those benefits here:
Achieve greater savings through cost-cutting: Suppliers bring your organization a range of benefits, particularly when it comes to acquiring top talent at a cost-effective price. However, poor supplier management can lead to wasting money on the wrong suppliers and poor supply chains. With SPM, however, you’ll have access to the actionable data you need to make the right supplier decisions. This can save your company significant amounts of money.
Build more informative supplier relationships: Sometimes poor supplier performance isn’t because your company is using a bad supplier, it could be the case that they just don’t fully understand what your organization is trying to achieve. By creating a supplier performance management strategy, you’ll be able to develop a relationship with your supplier that empowers them to understand exactly what your company wants to achieve and how their performance will be measured.
Improve internal efficiencies: By using technologies as part of your SPM strategy, your organization will be able to standardize and automate supplier management. This will vastly improve your operational efficiencies, allowing you to focus on what matters most - your company’s core competencies.
Why you should partner with an MSP to properly measure supplier performance
Supplier performance is complex and highly-specialized. By partnering with an outsourced managed services provider, your organization will gain access to the expertise and resources needed to implement a successful SPM strategy.
In fact, the money you pay to outsource this program to an MSP will pay for itself many times over through the money your business is able to save from an efficient, effective and data-driven supplier performance management strategy.
Are you looking for a solution that will ensure your organization is able to properly manage both its permanent and non-permanent workforce? Get in touch with HCMWorks today. Our team of workforce specialists would love to answer any questions you have.