If you’ve made it this far into our CFO blog series, then you’ve caught on to the key theme of how small adjustments can help CFOs and finance executives reap big business benefits. In previous blogs in this series, we’ve written about how effective PO lifecycle management can help eliminate excessive buffer stock, protect revenue, and increase productivity.
In part 4, we dive into how the same principles of better visibility, timely and effective communication, and healthy buyer/supplier relationships can yield better performance from suppliers.
Supplier Performance Starts with Engagement
Managing complex relationships across companies of different sizes and industries, each with its own set of logistical challenges, is difficult enough. In addition to risk management, being able to adapt to supply chain disruptions and having to work with different systems and processes to fill orders, it’s easy to see why procurement can be loaded with opportunities to improve efficiency.
For SourceDay, our approach to supplier engagement is just as foundational to our mission as our technology. Engagement correlates directly with performance—the stronger the engagement, the better the performance, and the more stable and reliable the supply chain becomes. This is where SourceDay Supplier Engagement can help. We’ve built our processes, tools, and culture on making it easy for suppliers to meet the expectations of our customers.
Our proprietary, programmatic approach to supplier engagement starts with bolstering the change management process our customers provide. Onboarding suppliers in a way that maximizes output without burdensome onboarding is a tricky needle to thread. In our experience, the best results happen when the buyer and supplier are able to collaborate on mutually beneficial outcomes instead of your typical transactional relationships. We’re addressing supplier engagement within the SourceDay platform in two ways. First, we’ve simplified the supplier dashboard so it’s always clear what needs to happen next and how to do it. Second, we’ve introduced a non-logged-in workflow where suppliers can review POs and accept or propose changes via email.
We introduced SourceDay Supplier Engagement in January, and we’ve seen engagement increase from 58% to 75% and on-time delivery (OTD) increase from 54% to 94%. This partnered approach has succeeded in making the process irresistibly easy for suppliers and empowering our customers to set standards and hold suppliers accountable.
You Can’t Fix What You Can’t See
We’ve covered in this series the value of pristine data for managing risks, but it’s also valuable for evaluating the performance of suppliers. Armed with accurate data for the lifetime of a PO, you can build a supplier scorecard and identify potential risks or areas where improvement is needed. Supplier performance is crucial to achieving operational excellence, cost control, and, ultimately, financial success. Our supplier scorecard is a comprehensive evaluation tool designed to monitor, measure, and manage supplier performance. It consolidates critical performance metrics into a single, easy-to-understand dashboard, offering a clear and detailed view of each supplier’s capabilities and reliability. By leveraging this tool, CFOs and finance executives can help elevate supplier relationships from transactional interactions to strategic partnerships.
The SourceDay platform offers real-time insights into supplier performance, order statuses, and potential bottlenecks. This extends to tracking key performance metrics for suppliers, including on-time delivery rates, quality metrics, and responsiveness, so you’re always aware of your suppliers’ performance. With all purchasing data centralized in one location, compiling a supplier scorecard is straightforward. Every purchase order change is tracked, allowing for full visibility into any changes. Performance data is visible to both parties, giving suppliers the agency to make proactive decisions to improve performance.
The Benefits of Tracking Supplier Performance
Supplier performance directly impacts the stability and reliability of the supply chain. Poor performance can lead to production delays, increased costs, and customer dissatisfaction. Supplier scorecards help identify potential risks by highlighting areas where suppliers may be falling short.
- Identify Key Performance Indicators | Define and monitor specific KPIs critical to operations.
- Engage in Constructive Feedback | Shared performance data fosters a collaborative approach to problem solving.
- Evaluate Supplier Improvement | Measure KPIs over time, gaining insights into a supplier’s strengths and weaknesses.
- Optimize Supplier Selection | Identify top-performing suppliers, ensuring more consistent quality and delivery.
Frictionless Supplier Adoption is Key
Getting suppliers on board with new systems is just as difficult as procurement itself. It doesn’t matter how effective the tool is if you can’t get people to use it. This is why SourceDay has been developed specifically to make adoption completely pain-free. It’s free for suppliers, and they can use SourceDay regardless of their existing systems, allowing them to integrate seamlessly without needing to overhaul their current processes. We also have a world-class support team organized around PO lifecycle management just for suppliers.
Procurement is hard. It requires a balance of strategic planning, risk management, relationship building, and technological integration to be successful. In an era where data-driven decision-making is paramount, supplier performance stands out as an indispensable metric for financial performance. SourceDay makes this task easier for everyone and brings what is typically a scattershot, uncomfortable process into focus.
In our final blog in this series, we’ll discuss how to build a competitive supply chain that meets current demands, is resilient enough to adapt to future opportunities, and provides a sustainable competitive advantage.
