Supplier performance management: factoring for supply reliability and disruptions

Abstract

Supply chains are more vulnerable than ever to supply disruptions. Liability from supplier failures falling on the manufacturers emphasizes the need to measure and control suppliers, and find ways of resolving supplier disruptions. Supplier performance will increasing dictate how companies mitigate supply bottlenecks and remove time and cost out of the supply chain. Key Findings: A study of the practices in Indian industries reveals that supplier performance management is more focused on supplier measurement and less on using the data to improve supplier output. There is also limited awareness or realization on the risks of supply unreliability. Organizations seem to build supplier product inventory as the most common protection to disruptions. Although western companies are very concerned about the need to check supply issues, the study did not reveal any concern for supply glitches, nor did it see any tie-in between supplier performance measurements to supplier execution failure amongst Indian companies. This could be attributed to the limited global sourcing of Indian manufacturers. Recommendations: Apart from increasing awareness among Indian manufacturers, key business process improvements have to be made. Closer monitoring of supplier, better recovery process, improved supply chain transparency, making scorecarding improvements and supplier development are the key to avoid and recover from supply disruptions.