There is a need for the enterprise to take a strategic and systematic approach to improve supplier performance, rather than engaging on a tactical, short-term and purchase-to-purchase basis. A key part of this is engaging with the right suppliers, with the right capabilities and willingness to align operational objectives with yours.
Supplier performance assessments are a means for gauging the capability and capacity of the supplier to meet the client's business and operational requirements. Supplier assessments should take place before developing a long-term strategic relationship. They enable you to assess at an early stage whether or not supplier development is feasible and determine if suppliers can deliver the necessary processes. The key aim of assessment is to encourage the right suppliers with the right structure to coordinate their operational excellence efforts with yours.The Supplier Development Strategy is built with a Supplier Value Stream Analysis defining the process for the development of suppliers and their value creation process. It also sets the criteria against which suppliers will be assessed during procurement. It provides the concrete link between the aims and priorities of the client as a whole and their suppliers. It is therefore vital that the assessment and development strategy successfully translates the two to three most important expected deliverables of the business transformation activity to the right suppliers being chosen for long-term relationships.
The guidance in supply chain management focuses not only on day-to-day management of performance, service delivery or peer-to-peer relationships, but also on strategic performance: the 'health' of the relationship between customer and supplier. The key deliverable of this process is the Supply Chain Strategy including evaluation plans and models, criteria for supplier selection and ongoing plans for assessments and progress reporting.