Supplier Management Techniques for Mitigating Risk and Driving Improvement

Growth in offshore sourcing has made supply lines longer, more complex and more vulnerable to delays and disruptions than ever. The intense pressure to cut costs leaves many companies with only enough inventories to last short periods of time. Minimal safety stocks -- coupled with long lead times and the uncertainties of low-cost, in-country sourcing -- translate into an increased risk of missed delivery dates that can delay shipments to important customers or leave store shelves bare.

Now more than ever, companies are finding it crucial to have accurate, timely and reliable supplier performance metrics to assess risks and take precautionary measures when needed to avert problems. In addition, suppliers also have an inherent interest in accurate and timely information to help them preserve their preferred supplier status to ensure their products meet or exceed acceptable PPM and Corrective Action thresholds set by their clients. Hence, monitoring supplier performance is very high on the agenda for both supplier and client companies.

The objective of this paper is to present a flexible, assessment-based supplier management solution that provides managers and executives with accurate and reliable business intelligence to make decisions with confidence. Support tools such as supplier scorecards and data analysis will be evaluated as potential tools to help make informed decisions that can lead to achieving important strategic business objectives.

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