A dedicated interim procurement support helped successfully handle the combined challenge of higher level attrition and internal strategic changes.
Strategic Sourcing in Travel Management
A robust Supplier Performance Management (SPM) program helped identify key long-term supplier partners and improved overall supply chain performance.
Overview
A global pharma chemicals company with a very large supply base was going through procurement transformation and needed a strong supplier management foundation.
Challenges
- Large and fragmented global supply base.
- Legacy tactical procurement function.
- Lack of data and prior supplier performance management expertise.
Solutions
A comprehensive supplier performance score card along with review questionnaire was drafted that included general performance areas in a global chemicals supply industry. Score card included 6 level-1 scoring parameters and 15 level-2 categories around cost, quality, logistics, service level, risk, and innovation. Based on the scorecard, suppliers were categorized as Gold, Silver, Bronze, and Exit.
A pilot was conducted with 5 suppliers to make sure the responses are in line with the expectations. Subsequently over 200 suppliers globally were evaluated under this program.
Various work streams included –
- Identify key level-1 & 2 parameters of supplier evaluation.
- Develop a detailed questionnaire for each of the level-2 criterion. For example, risk parameters included questions on financial risk, operational risk etc.
- Establish KPIs and measurement systems at level-2 criterion.
- Establish direct data extraction from ERP system, where possible (example – OTIF).
- Clear data-based scoring guidelines for each of the criterion.
- Weights assigned to each of the parameter based on current organizational needs
Results
Provided a clear understanding of the supplier landscape with its impact on the company’s supply chain.
Key outcome of this exercise included –
- Increased visibility into supplier performance.
- Baseline scores for improvement plans.
- A foundation for regular business review with supplier partners.
A robust SPM program helps reduce risk and improve supply chain performance
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