GOVERNANCE
No progress in contract and performance management Companies reporting effective* contract and performance management in place with more than 75% of critical suppliers (2014 to 2019)
Contract and performance management
should be reserved for engagement with those suppliers that can contribute most to achieving an organisation’s strategic goals. However, that engagement can only be truly successful if it is built on a solid foundation of contract and performance management. Our research has covered contract and performance management since 2014 and the results have been a cause for concern. They show no appreciable increase in the proportion of companies with effective contract and performance management in place for more than three-quarters of their critical suppliers. Such a failure of organisations to manage the basic contractual and performance aspects
Effective* contract and performance management means that all supplier engagements are covered by valid contracts, approved by the appropriate authority; key contract terms and milestones are understood, monitored and acted upon; contracts contain appropriate SLAs and KPIs; and contract change is managed effectively. It also means SLAs and KPIs are clearly defined and agreed; performance against KPIs is measured and reviewed on a regular basis; and corrective and improvement actions are agreed and executed. Earlier in this report, we discussed the definition of SRM and how the term
2014
29%
2015
30%
2016
45%
2017
33%
2018
20%
2019
29%
Snapshot analysis
A telling difference between SRM leaders and followers is their attitude towards governance. There can be a tendency to think of it as housekeeping: a tidy thing to do but not the be-all and end-all. But governance is fundamental to managing suppliers: organisations need to know which ones to work with, how to work with them, and how to measure the results. Working with suppliers, they need to create clear roles and responsibilities. SRM leaders understand the importance of governance and it shows in the benefits they accrue.
2019 GLOBAL SRM RESEARCH REPORT
45
Powered by FlippingBook