Supplier Performance Management
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1 Supplier Performance Management Services 2012 Hard Criteria Quality Delivery reliability Organisation of work & fit Soft Criteria Supplier Development Total Price Performance
2 Supplier Performance Management Services Introduction Supplier Performance Management Gasunie Supplier Performance Management Gasunie has well over a thousand suppliers, devided by procurement into suppliers for materials, contracting and services. For each of these groups of suppliers we made a flyer. This is the flyer for Services which includes everything ICT-and facilities related. Hard Criteria 60% Soft Criteria 40% Why SPM Gasunie strategy: Operational Excellence is our licence to operate. This requires us to ensure performance from ourselves and from the services and goods delivered by our suppliers. Supplier performance measures: Hard Criteria Quality Delivery reliability Organisation of work & fit Soft Criteria Supplier Development Total Price Performance The procurement department of Gasunie has a program of continuous improvement. We are formalizing SPM Supplier Performance Management-. The M in SPM could mean Measurement too. We are keen on measuring because we can only manage what we measure. What SPM is SPM consists of: Standard scorecards based on the commodity of the supplier, Scorecards identify areas of strength and areas for improvement, Periodic reviews with the supplier, Gasunie gives scheduled feedback on performance one to four times a year, depending on risk profile, commodity, money involved and relationship, Performance improvement plans are developed and tracked. SPM scorecards defines metrics (KPI- Key Performance Indicator) consisting of hard criteria and soft criteria. 2
3 Hard Criteria Hard Criteria 60 Points Quality The number of points for quality is as follows: Organisation of work & fit Delivery reliability Hard Criteria Quality 20 points Delivery reliability 20 points Quality Organisation of work & fit 20 points 0 unacceptable / poor. 5 below average, area of improvement. 10 in general conformance to requirements ( average ). 15 conformance to requirements and SMART measured / planned. 18 exceeds expectations (distinctive added value). 20 (generally recognised as) world class. What Quality means depends on the type of contract and the commodity, that is: what sort of goods or services is delivered. Due to the many types of contracts, suppliers and commodities you cannot find a definition of quality here. We will however discuss the meaning of quality when we discuss the given scores. Generally speaking it is: to what extend is delivered according agreed requirements and/or guidelines? To what level is the supplier adding value, related to the agreed deliverables? Delivery Reliability To what extend is delivered according to agreed planning, time schedules and/or lead times both the service itself and supporting processes e.g. administration and invoicing. The scoring table is the same as for Quality. Organisation of work & fit What is the quality of the planning and organisation? Is there a good, cultural and human fit between involved employees from supplier and Gasunie side? The scoring table is the same as for Quality. 3
4 Supplier Performance Management Services Soft Criteria 40 points Soft Criteria Supplier development Supplier Development: Organisational development The supplier organisation is regarded by Gasunie as being in one of the following six development phases: Supplier Development Organisational Development (8 points) Technological Development (7 points) 0 No or little evidence of improvement plans within the organisation. 2 Significant evidence of improvement plans within the organisation. 4 Significant evidence of improvement plans in the areas of Safety, Quality (of product and/or service) and Sustainability. 5 Improvement plans are periodically monitored and reviewed by the management team. 7 Continuous improvement is explicitly on the management agenda. Significant evidence of actions intended to embed continuous improvement throughout the organisation. 8 Continuous improvement is tangible embedded on all levels of the organisation. (15 points) Total Price Performance (10 points) Supplier Development: Technological development The supplier technical development is regarded by Gasunie as being in one of the following six development phases: 0 No or little evidence of (top level management support for) technological development. 2 Technological development is on the management agenda, mainly focused on product (or service) innovation. 3 Technological development is mainly focused on product (and/ or service) innovation and includes development of IT systems (such as CAD/CAM and development support systems. 5 Structured (planned and SMART measured) product innovation (including IT systems) and (mainly internally focused) process innovation. 6 Both product and process innovation are planned and SMART measured, including structural involvement from supply / demand chain partners (such as co-design, co-engineering and lean supply chain ) and are structurally reviewed. 7 Seamless integration between supply chain partners in product and process innovation, generally recognized as world class. 4
5 Soft Criteria 40 points : Responsiveness How is supplier responding to questions of Gasunie? Supplier development 0 Supplier is not responding to questions and addressed issues. 1 Supplier needs frequent reminders, is slow to respond to questions and slow in follow-up on problem resolution. 3 Supplier needs almost no reminder, is adequate and timely in responding to questions and follow-up on problem resolution. 5 Supplier needs no reminder, is excellent in responding to questions and follow-up on problem solving. Supplier Development (15 points) Responsiveness Flexibility Pro active Total Price Performance (10 points) : Flexibility How flexible is supplier towards Gasunie? 0 No or little evidence of planning and/or scope adjustment flexibility. 1 Some evidence of planning and/or scope adjustment flexibility (without excessive cost increase), supporting Gasunie general requests. 3 Evidence of planning and/or adjustment flexibility (without excessive cost increase), some evidence of supporting Gasunies special requests. 5 Evidence of flexibility (without excessive cost increase) towards Gasunies special requests. : Pro-activeness How pro-active is supplier towards improving its own performance as well as Gasunies? 0 No or little evidence of (incident or ad-hoc driven) improvements. 1 Some evidence of (incident or ad-hoc driven) improvements mostly initiated by Gasunie. 3 Evidence of (incident or ad-hoc driven) improvements mostly initiated by Supplier. 5 Evidence of continuous drive towards improvements initiated by Supplier. 5
6 Supplier Performance Management Services Soft Criteria 40 points Total Price Performance The score reflects the total costs for Gasunie doing business with the supplier and the effective contribution from supplier in this respect. The score is not only given directly, but derived from other factors described above as well. Supplier development Supplier Development (15 points) Responsiveness Flexibility Pro active Total Price Performance (10 points) 0 Price-quality ratio is far below market average. Unacceptable additional costs for Gasunie as a result of the total life cycle quality of supplied product or service. 2 Price-quality ratio is below market average. Price adjustments are not always discussed and agreed upon before implementation. No initiatives from supplier to decrease own costs reflecting in a lower selling price. Significant additional costs for Gasunie as a result of the total life cycle quality of supplied product or service. 6 Price-quality ratio is reflecting market average. Price adjustments are discussed and agreed upon before implementation. Some initiatives from supplier to decrease selling price. Average (nominal) additional costs for Gasunie as a result of the total life cycle quality of supplied product or service. 8 Price-quality ratio is above market average. Price adjustments are implemented after discussion based on cost transparency. Some initiatives from supplier to decrease costs in the total value chain. Below average additional costs for Gasunie as a result of the total life cycle quality of supplied product or service. 10 Price-quality ratio is (generally recognized as) world class. Price adjustments are implemented based on open book calculation and are supported by cost improvement initiatives and market facts. Continuous initiatives from supplier to decrease costs in the total value chain. The level of additional costs for Gasunie as a result of the total life cycle quality of supplied product or service, is (generally recognized as) world class. 6
7 Supplier Scorecard Scorecard The supplier scorecard dashboard is shown using Ariba. Ariba is the standard procurement tool for Gasunie. The supplier scorecard is made one to four times a year in Ariba. The Gasunie supplier manager initiates the meetings with supplier to review the performance, monitor and discuss both existing and new improvement plans. Example of a Scorecard in Ariba: Scorecards filled in by Gasunie key stakeholders, The average results and comments will be visible to the supplier using Ariba (see ) the tool Gasunie uses for procurement, The scorecard in Ariba contains the scores, and often a comment on how/why this score was given. All scorecards are saved and can be seen by the Gasunie relevant people and by the supplier whom it concerns. A supplier cannot see the scorecard, or anything else, of another supplier. 7
8 Supplier Performance Management Services July 2012 This folder is printed on FSC certified paper.
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