Supplier Performance Management For Manufacturers

Source: 2004 APICS International Conference Proceedings.
Copyright © APICS—The Association For Operations Management. Used by permission.

About half of every dollar a company earns is spent on goods and services provided by external suppliers. In certain industries – e.g., high-tech and automotive – materials, parts, and assemblies provided by external suppliers can comprise between 70 percent and 80 percent of the total cost of new products. This paper provides an overview of the latest advancements in supplier management that can give manufacturers more control over their supplier relationships and improve their overall supply chain performance. The findings are based on surveys and research conducted by Aberdeen Group over the past 18 months.

The paper addresses the following supplier performance challenges:

• Electronically integrating to suppliers
• The ability of suppliers to provide accurate, timely information on in-process or in-transit orders
• The reliability of suppliers in fulfilling orders on time and completely

It goes on to discuss how leading companies are moving to supplier management practices that leverage technology to improve their ability to:

Communicate
This section discusses worst-to-best practices for physically exchanging orders, plans, and statuses between companies and their suppliers.

Coordinate
This section compares industry laggards to leading performers in terms of what type of information is shared between these companies and their suppliers.

Monitor
This section examines how companies track the status of in-process and in-transit orders from their suppliers and escalate issues. It also discusses supplier performance scorecarding.

Control
This section reviews emerging best practices for intelligently recovering from supply disruptions, and inserting control points to prevent glitches in the supply process.

About The Author
Beth Enslow is vice president of enterprise research at Aberdeen Group, a lecturer at the Executive Center for Supply Chain & Logis-tics Management at York University's Schulich School of Business, a former Gartner analyst, and author of numerous published articles on supply chain management.