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What Is Supplier Performance Management?

Supplier performance management (SPM) is a business practice that is used to measure, analyze, and manage the performance of a supplier. Supplier management professionals seek to cut costs, alleviate risks, and drive continuous improvement. Companies use systems to monitor supplier performance levels.

What Is a Supplier Performance Scorecard?

A supplier performance scorecard (supplier scorecard) is a tracking tool used to monitor supplier performance. Supplier scorecards track metrics such as quality, delivery, lead time, price and responsiveness of suppliers over time. Supplier performance professionals use scorecard data to improve supplier relationships

Supplier performance management is more than simply obtaining data on suppliers. It reflects the company’s strategy and is a comprehensive approach to managing a company’s supply base. It seeks to identify and mitigate risks to boost overall profitability. It often involves performance assessments, supplier scorecards, periodic reviews of supplier data, and supplier development. It also includes an orientation that is geared toward improving the performance of the supply base and buying well. Supplier performance management also involves software, systems, processes, and people. Effective supplier performance management is not easy to achieve and takes knowledge or an organization’s goals, business processes, structure, and supply base. When it is done well, it can bring significant monetary benefits to a company.

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