This toolkit helps you better understand supplier management and is for anyone involved in supplier relationship management activities.
This toolkit is for anyone involved in supplier relationship management activities, including people within or outside the procurement function, such as:
Supplier segmentation helps agencies understand the risks and opportunities presented by supplier relationships. It determines how critically and strategically important the supplier is to the agency.
Conducting supplier segmentation:
The benefits of supplier segmentation include:
See the supplier management toolkit and guidance for leader’s toolkit for further information on the supplier segmentation process.
The goal of supplier managment is to maximise value in existing contracts and create value beyond the original contract. Achieving this requires effective performance management with a clear understanding of the following:
A balanced scorecard is a tool that can be used to manage the performance of suppliers and gain a better understanding of the current performance of the relationship.
A typical supplier balanced scorecard will consist of the following elements:
Learn more about managing performance during delivery
Meetings to discuss performance should be established throughout the life cycle of the supplier relationship. Meetings can be operationally focused on day-to-day activities or relationship focused on continuous improvement initiatives. These meetings offer opportunities to review a broad range of supplier engagements including the delivery of SRM work streams, review Key Performance Indicators and discuss contractual performance.
By implementing a regular cycle of supplier meetings which address both short and long-term organisational needs, the full value of SRM can be realised.
The supplier meeting plan should be used as a guide for how supplier meetings should take place.
Value creation can take the form of both financial benefit and capability improvements. Value creation can be documented through case studies in a consistent and transparent manner.
The following table outlines areas to consider when seeking to measure value:
|Operations and accountability||
|Preferred customer status||
|Innovation and improvement||
Successful supplier management delivery requires ongoing monitoring and improvement of performance. This includes:
Service improvement plans (SIP) respond to a downward trend or significant failure in service. A SIP will be initiated when an operational issue is not resolved and is escalated to the relationship management level.
Successful innovation requires a high level of organisational maturity and carries significant potential for improvement.
There are two approaches to innovation:
Open innovation can be more costly and time-consuming than guided innovation, but it can lead to breakthrough opportunities.
The innovation identification and tracking tool provides guidance for stakeholders to assess innovation ideas and provide recommendations.