The Journey to Best-in-Class Supplier Management Practices

Companies that have achieved top performance for supplier management have many factors that contribute to their results, but nearly all of them followed a similar path in moving from laggard to average to “Best in Class.” Let’s take a quick look at the main elements of their journeys.

Understand What You Have Today

They all began with a rigorous, honest assessment of their current environment and mapped out what best in class processes and solutions look like. They are likely to have used tools from organizations like ISM, CSCMP, and AQPC to help with the evaluation and to benchmark themselves on key spend management and supplier management KPIs.

Gap Analysis & Prioritization

Next, they identified where they had the largest gaps, either between current performance and best in class, or where they lacked processes or capabilities entirely. This is followed by an analysis to estimate the cost associated with closing each gap or related group of gaps.

Prioritization of process reengineering and/or solution evaluation will be based upon many factors, only some of which are quantifiable. Companies may choose to go after the gaps with the biggest financial impact first, or those that allow them to add a completely new set of capabilities. Often they look for an opportunity for a quick win with which to validate the process and drive future improvements.

Evaluation

Best-in-class performers universally use technology as a key part of their strategy. In evaluating technology solutions, the key is to look to the established prioritization strategies to help define the most important evaluation and selection criteria. They confirm that any vendor can satisfy both near-term and long-term requirements as well as is an organization they are comfortable working with.

Implementation – Results

There will be lots of structure around implementation from the solution vendor, so just a couple of points here: best-in-class performers typically start with a quick win. Success sets the stage for more complex phases and helps demonstrate how effective the vendor’s services are. And they measure! Best-in-class companies use benchmarks to see if they are on track to deliver the promised value and take corrective action when they are not meeting the mark.

When your organization is ready to set off on the path toward supplier management strategy improvements, use these proven steps as a starting point so that you too can achieve best-in-class performance.