Supplier Performance Management. Eliot Madow CPSM VP Client Services - Hiperos Director - PMAB

Size: px

Start display at page:

Download "Supplier Performance Management. Eliot Madow CPSM VP Client Services - Hiperos Director - PMAB"

Maud Anthony
8 years ago
Views:

1 Supplier Performance Management Eliot Madow CPSM VP Client Services - Hiperos Director - PMAB

2 Agenda Different Approaches Service Level Agreement (SLA) Approach Balanced Scorecard Approach Best-in-Class Practices Discussion, Questions 2

chain disruptions Holistic view of third party across stakeholders & business processes Industry s

3 About Hiperos Leader in 3rd Party Management: Regulatory impact o banking and industry specific, ABAC, Conflict Minerals, FATCA Reputational impact o social accountability Customer revenue impact o supply chain disruptions Holistic view of third party across stakeholders & business processes Industry s first intelligent SaaS solution Largest third party management network Used in 177 countries, 36 languages 3

4 About PMAB Serving Supply Management Professionals in the Greater Boston Area (Including: Boston and Eastern MA Lower NH Lower ME Upper RI) The Purchasing Management Association of Boston, Inc 200 Baker Ave., Suite 306 Concord, MA Tel , Fax

Management Association of Boston, Inc 200 Baker Ave.

5 Agenda Different Approaches Service Level Agreement (SLA) Approach Balanced Scorecard Approach Best-in-Class Practices Discussion, Questions 5

6 Performance Management Approaches SLA Approach Focused on a single supplier, and a single contract (relationship) Evaluation items are specific to contractual obligations (SLAs and/or KPIs) Frequency of evaluation relatively high (quarterly, monthly, weekly, or daily) Many times tied to performance-based compensation model Usually focuses on lagging indicators 6

and/or KPIs) Frequency of evaluation relatively high (quarterly, monthly, weekly, or

7 Performance Management Approaches Balanced Scorecard Approach Borrows from the Kaplan/Norton model of a multi-dimensional framework of both leading and lagging indicators 7

8 Performance Management Approaches Balanced Scorecard Approach Focused on a group of suppliers (or the entire supply base) Evaluation items are general and typically apply to a broad range of suppliers Evaluation is performed at different levels (contract, supplier, region) Frequency of evaluation relatively low (semi-annual or annual) Many times tied to segmentation model Balance of both leading and lagging indicators 8

Evaluation is performed at different levels (contract, supplier, region) Frequency of evaluation

9 Agenda Different Approaches Service Level Agreement (SLA) Approach Balanced Scorecard Approach Best-in-Class Practices Discussion, Questions 9

10 SLA Approach Example KPIs Vertical Facilities Management Accounting Travel Services Manufacturing IT Services Temp Labor Event Management KPI Critical periodic maintenance completed as scheduled with greater than 98.5% reliability Timeliness and accuracy of periodic financial reports Call response time: 80% of calls answered within 20 seconds Order fulfillment lead time Meet or exceed contractual performance standards for system availability (uptime) 90% of orders for technical and professional staff fulfilled within 5 days Attendee acquisition count compared to target 10

5% reliability Timeliness and accuracy of periodic financial reports Call response time: 80% of calls answered within 20 seconds Order

11 SLA Approach Construction Evaluation at the contract level (connected to a relationship) Rating scales are typically numeric Assessment usually results in a numeric expression of performance (0-100%) Workflow selected to reflect desired management approach (typically involves the third party) 11

results in a numeric expression of performance (0-100%) Workflow selected

12 Example of scorecard 12

13 Completed scorecard overall structure 13

14 SLA Approach Results Customer Supplier Goals Alignment Performance Q1 Q2 Q3 Q4 Q1 Q2 Predictive Indicators Remedial Action Indicator 14

Alignment 4 2 0 Performance Q1 Q2 Q3 Q4 Q1

15 Agenda Different Approaches Service Level Agreement (SLA) Approach Balanced Scorecard Approach Best-in-Class Practices Discussion, Questions 15

16 Balanced Scorecard Approach - Examples Category Indicator Value Supplier invoices at contracted pricing lagging Value Supplier is able to attract and retain high caliber talent and staff to manage Company business, within the agreed upon fees leading Quality Supplier meets contractual obligations on time lagging Quality Risk Risk Supplier has effective escalation processes, resource retention plans, knowledge transfer plans Supplier performed well on their most recent Offshore Facilities Audit Supplier is financially stable across all major financial areas leading lagging leading 16

obligations on time lagging Quality Risk Risk Supplier has effective escalation processes, resource retention plans, knowledge transfer plans

17 Balanced Scorecard Approach Construction Evaluation is generic spans different types of thirdparties Evaluate at the supplier and/or contract level Use business rules to enroll suppliers The assessment may or may not involve the third party 17

the supplier and/or contract level Use business rules to

18 Example of scorecard 18

19 Completed scorecard overall structure 19

20 Balanced Scorecard Results Strategic Operational Commodity Supplier Ranking Segmentation 20

21 Supplier Index Supplier Score:

22 Agenda Different Approaches Service Level Agreement (SLA) Approach Balanced Scorecard Approach Best-in-Class Practices Discussion, Questions 22

23 Best-in-Class Practices Measure outcomes, not activities Avoid perverse outcomes SMART metrics Specific, Measurable, Achievable, Relevant, Time-bound Performance-based compensation Fee at Risk vs. Penalties and Bonuses Increase the size of the pie Include questions for the supplier to evaluate the customer (360 evaluation) 23

24 Agenda Different Approaches Service Level Agreement (SLA) Approach Balanced Scorecard Approach Best-in-Class Practices Discussion, Questions 24

25 Discussions, Questions 25

26 Thank you for attending Contact Information Eliot Madow - VP Client Services ( ) madow@hiperos.com (website) (phone)

Overview of Future Purchasing s fundamental and advanced training workshops...

Performance Learning Presented by: Anna Del Mar - Director, Performance Learning Future Purchasing Overview of Future Purchasing s fundamental and advanced training workshops... Tailored excellence.. Our