Jon Gilbertson's blog

These days, competition is no longer just between organizations.  It’s not uncommon for competing companies to rely on the same supplier(s) for their product or service.  In those instances where two companies use the same supplier for their product or service, it becomes critical to ensure the supplier is providing you with better service and quality than your competitor.  In effect, the competition exists  between supply chains and how those supply chains are managed.

When we talk about supplier performance management, many of us have a structured set of guidelines to ensure success – we’ve all received advice on what best-in-class companies do to manage a fruitful long-term SPM program.

However, to strengthen your efforts to outperform your competitors, try taking it another step by looking at what supply chain professionals can learn from human resources practices that will improve your supplier performance management program

Sound strange?

Think about it: just as you want employees to want to work for your company, you want suppliers to want to work with your company. It’s not always because you’re the largest and offer the most volume – there are other items that apply when push comes to shove.

Read through the below for some HR practices that supply chain professionals can use as well.

• Work Environment
  A safe and happy workplace makes the employees feel good about being there. Likewise, a positive environment for a supplier will give them the motivation and incentive to partner with you.
• Open Management
  Suppliers, like employees, will feel motivated and develop enthusiasm only when your organization opens up to them and discusses the company policies, sales, clients, goals and objectives.
• Performance Incentives
  Completion in an appreciable manner calls for an incentive. Just as incentives have worked wonders in getting the best out of employees, it will help your organization differentiate from your competitor in the supplier’s eyes.
• Performance Feedback
  Previously, appreciation was only sought from the immediate boss or the management, but now, the opinion of everyone matters and each person in the team is responsible for giving constructive feedback. When applied to your suppliers, especially your most strategic suppliers, it not only empowers them, but it also helps you identify those among your supplier base who can perform at the highest level of expectations.
• Employee Evaluation – Supplier Evaluation
  Every company has an employee evaluation system in place, but a good system links individual performance to the goals and priorities of the organization.  Similarly, your supplier performance metrics and the supplier evaluation system associated with it should be aligned with the organizational strategy. Most importantly, the suppliers should be aware of and also understand this link.
• Sharing of Knowledge
  Consider sharing knowledge across your supplier base, similar to the way in which an intranet shares information with employees. Try keeping the information in central databases that can be accessed via supplier portal; not only general information, but also outcomes from supplier training, quarterly reviews, continuous improvement actions, etc.
• Publicize Good Performances
  Every company has some employees, and also some suppliers, who outperform others. Such performances should be highlighted and displayed where other suppliers can look at them. This will encourage other suppliers to give their best.
• Discussions
  Successful organizations nurture ideas, and they understand that employees who are actually working in the area or department know the business can provide the best ideas. Likewise, suppliers who are actually working in the field can provide very valuable feedback.  You need to facilitate this dialogue.
• Rewards
  While recognition of talent is highly important, this recognition has to be made public. Hold ceremonies and announce to your supply chain and to the industry the achievements of a fellow supplier.
• The Surprise Factor
  Surprise deserving suppliers when they are least expecting it. Recognize a supplier for a critical incident where they’ve stepped up and came through for you. This surprise doesn’t have to be limited to the best performers, but it can be randomly given to others as a motivating factor as well.

These healthy HR practices encourage the growth of the organization by improving the overall supplier performance and relationship management. We talk about partnership with suppliers, but then fall back to scorecards and measurements. In order to improve your overall supplier performance and ultimately inspire stronger results from suppliers used by your competition, keep in mind some of the HR best practices.

Please contact Jon Gilbertson, Vice President, Global Supply Chain & Procurement at SIRVA with questions about this post.