| The impacts of poor supplier
performance are felt across the enterprise. Every day companies
are struggling with excess inventory, delayed production
schedules, increased service calls, and other consequences
of poor supplier performance management. One manufacturer
keeps more than one million dollars of excess inventory on
hand as a hedge against delivery problems. Another company
was forced to shut down an assembly line because they only
received a partial order of a crucial part. Manufacturers
that are unable to approach these problems systematically
with substantiating facts and an effective supplier management
process are unable to stem the added costs that result. |
| When poor supplier performance
is translated into lost profits and increased requirements
for sales revenues, the topic of supplier performance measurement
takes on a heightened importance. GradeCard® provides
manufacturing companies with information and analysis that
ensures supplier performance improvement that leads directly
to improvement in the bottom line. |
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| The goal of a successful
Supplier Performance Management System (SPMS) is to cultivate
suppliers who consistently deliver quality product, on time,
in full, with proper documentation, and are easy to work
with on a daily basis. A successful SPMS assists manufacturers
and suppliers to collaboratively work on issues that impact
each of their businesses, and it helps eliminate costly mistakes. |
| Implementation of a successful
SPMS involves: |
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Clear supplier understanding
of performance expectations |
|
Rewards for performance excellence |
|
Consequences for poor performance |
|
Consistency of the manufacturer’s
effort in applying the measurement system performance
criteria and parameters |
|
| Manufacturers who use an
SPMS to build improvement collaboratively reap the rewards
of increased operational effectiveness, substantial cost
improvements and decreased lost profits. All too often a
manufacturer’s memory of poor supplier performance
and a supplier’s recollection of poor performance differ
greatly. Therefore, use of an SPMS system for documenting
actual supplier performance is vital to establishing clear
goals and objectives. |
