I started discussing the DMAIC principle for supplier management and elaborated on the DMA – Define, Measure and Analyze parts in my previous blog.

Moving on, let’s have a look at the “I and C” part of the DMAIC principle and how modern procurement technology can help implement the principle.

Improve:

Once the analyzed data and results are ready, the supply manager should segregate suppliers based on performing and non-performing. This segregation is important as different strategies will be applicable for these two types. For the suppliers that are not performing well, development plans should be in place. The supply manager should understand why a supplier is not performing on a set criterion and work a supplier development program. The program must have objectives with end dates which both supplier and supply manager have agreed upon.

At the same time, a supply manager should also give feedback and express appreciation to best-performing suppliers. For strengthening relationships with suppliers, it is important to recognize the best performance of suppliers.

Control:

At this stage, the supply manager has to ensure that the process is improving day by day. There should be a mechanism in place to alert the supply chain manager if the performance of a supplier is changing. The supply chain manager should also monitor the KPI on which most of the suppliers have performed well and the KPI on which most of the suppliers have performed poorly, and run timely reports to ensure that everything is under control.

Leveraging technology to help implement the DMAIC principle:

Supply chain managers can leverage sophisticated procurement technology to measure and track supplier performance. It gives an automated platform which facilitates to run a supply performance management program with ease and increased accuracy.

Some of the benefits of using technology for measuring supplier performance are:

• KPI and scorecard library to make sure there are standard KPIs and Scorecards maintained across categories.
• Standard dashboard to get a single views of the performance of different suppliers across categories and spends.
• Reminders and alerts can be set for different criteria.
• Analysis of supplier performance across category, spend, facilities, and company level.

Learn More: Vendor Management