Supply Excellence — Supplier 411

Supplier 411

July 3rd, 2007 · by Tim Minahan · No Comments · supply management, supply risk

Yesterday I questioned whether it was time to retire the vendor master in favor of more dynamic and holistic supplier record. My argument was based on recent comments from supply management executives — including Hewlett-Packard’s Purchasing Risk Management (PRM) program lead Venu Nagali — claiming that most companies lack timely and accurate visibility into the capabilities and performance of their suppliers.

Today, I’d like to challenge Supply Excellence readers to think outside the vendor master to answer the following question: What type of information do I require to truly manage a supplier?

Arguably, the answer to this question can be segmented into three categories:

Communications — This is the information required to communicate and collaborate with a supplier, such as basic profile information required to interact and collaborate with a supplier, such as company name, contacts, DUNS number, products or services provided, etc.
Competencies — This is the information required to assess which suppliers have the capabilities to meet existing and future demands. Information in this category includes attributes and capabilities information, such as manufacturing methods, machinery, and capacity, certifications, insurance documentation; diversity status, etc. Many companies will also need to understand these attributes for the supplier’s suppliers.
Performance — This is the information required to determine the risk of a particular supplier. This includes both quantitative (on-time delivery, PPM, etc.) and qualitative (service levels, capability assessments, etc.) of internal measures of supplier performance. This information should be supplemented with internal information, such as existing contracts with the supplier and supplier status (e.g., approved, preferred, etc.). It should also include external intelligence on supplier (e.g., financial risk scores, balance of trade, news events) and its category (e.g., inflation/deflation, commodity input risks, etc.).

In future posts, we’ll examine how leading companies are gathering and maintaining this holistic supplier record.

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