GOVERNANCE
and use of supply chain scorecards for measurement of supplier performance. Scorecards have both uniform and customised metrics based on the specific commodity. At all times, the established metrics allows business units to utilize measures of performance, which help them achieve their business objectives.
“We believe strongly in the use of SRM, and we benchmark our programme against other companies, using Gartner, and work with the Center for Advanced Procurement Strategies (CAPS), which is a partner organisation to the Institute for Supply Management (ISM). We discuss SRM processes with suppliers within our own supply base, all in an effort to adopt approaches which get the best results,” says Mark Guilfoil, vice president of supply management at the USPS. The Service uses more than 15,000 suppliers annually, although only around 10% of those are contracted for repetitive business each year. The annual review process establishes approximately 75 suppliers as key suppliers, who are invited to, in addition to prior SM Supplier Award winners, participate in the Postal Supplier Council. Relationship managers on the same level The procurement team asks a series of questions to determine whether a supplier might sit in one of the quadrants (Supporting, Leading, Critical, or Strategic). Questions include the level of business spend with the supplier, as well as the supplier’s market position and power. Other factors are also considered such as substitutability, intellectual property ownership, and demonstrated innovation in the commodity. “If the supplier is placed into one of the quadrants based on our analysis to these questions, then they are qualified for consideration of key supplier designation. We assign a RM based on their quadrant from both SM and from our internal business partner (IBP) to establish scorecard metrics and establish a performance review schedule,” Guilfoil says. “While some suppliers are assessed quarterly, most are measured every six months.” Since the relationship is managed by a senior manager within SM and the Postal Service’s business unit, the suppliers are expected to match and put forward a manager of commensurate position from its side to interface with USPS. “If we are holding a performance review with a key supplier within our
One of the hallmarks of our programme is that we don’t just have a static scorecard. There is an element of it which is the same, but then there’s also a tailoring effect.
New benchmarking for business challenges
In 2018, the USPS SM organisation updated its SRM governance model to incorporate best practices and ensure it maximised innovation and efficiency from suppliers. It moved from using a nine-quadrant approach to a four quadrant system.
2019 GLOBAL SRM RESEARCH REPORT
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