Ah, supplier performance improvement plans. The ultimate weapon in the procurement professional’s arsenal. If you’re reading this blog post, it means you’re already on the path to procurement greatness. But, let’s face it, nobody wakes up in the morning excited to create a supplier performance improvement plan. It’s like going to the dentist, necessary but not exactly fun. However, with a little bit of guidance, you can turn this task into an opportunity to boost your supplier relationships and even your own career. So, let’s get started.
What is a supplier performance improvement plan?
A supplier performance improvement plan (SPIP) is a document created by a buyer to help a supplier improve their performance. This plan is typically created when a supplier is not meeting expectations in terms of quality, delivery, or cost. The SPIP outlines the specific areas where the supplier is falling short and provides a roadmap for improvement.
Why is a supplier performance improvement plan important?
Let’s face it, nobody is perfect. And that includes suppliers. Even the best suppliers can have performance issues from time to time. However, as a procurement professional, it’s your job to ensure that these issues are addressed and resolved quickly. This is where a supplier performance improvement plan comes in handy. By creating a SPIP, you can help your supplier identify the areas where they need to improve and work with them to come up with a plan to get back on track. This not only helps you maintain a strong supplier relationship but can also help you reduce costs and improve product quality. Additionally, it can help you build a better relationship with your supplier, which can lead to cost savings and improved delivery times.
A SPIP is an essential tool for procurement professionals, because it provides a framework for improving supplier performance
How to prepare a supplier performance improvement plan?
Step 1: Identify the problem
The first step in creating a supplier performance improvement plan is to identify the problem. This could be anything from missed deliveries to poor product quality. Whatever the issue may be, it’s important to clearly identify it so that you can work with your supplier to come up with a plan to address it. Remember to be specific and provide examples to help your supplier understand the issue.
Let’s say you’re working with a supplier who consistently delivers sub-par quality products. You need to identify this issue and provide specific examples, such as product defects, customer complaints, and warranty claims. Spell things out loud so that there is no ambiguity on what is the identified problem. Ambiguity leads to miscommunication.
Step 2: Define the desired outcome
Once you’ve identified the problem, the next step is to define the desired outcome. What do you want your supplier to achieve? This could be anything from on-time delivery to improved product quality. Again, be specific and provide examples to help your supplier understand what you’re looking for.
For example, you want the supplier to consistently deliver high-quality products that meet or exceed your specifications.
Step 3: Create a plan of action
Now that you’ve identified the problem and defined the desired outcome, it’s time to create a plan of action. This plan should outline the specific steps that your supplier needs to take to improve their performance. Be sure to include deadlines and milestones to help track progress.
For example, you might require that they implement a new quality control process, provide additional training to their employees, and conduct regular audits of their manufacturing process.
Step 4: Communicate the plan to your supplier
Once you have created the plan of action, it’s important to communicate it to your supplier. Schedule a meeting or send an email to the supplier and clearly explain the plan. Answer any questions that the supplier may have, and make sure that they understand your expectations. Remember, the goal is to work with your supplier, not against them.
Communication is key to making sure the plan is executed properly.
Step 5: Monitor progress
After the plan has been communicated, it’s important to monitor progress. This means regularly checking in with your supplier to see how they’re doing and if they’re meeting the goals outlined in the plan. If necessary, adjust the plan as needed to ensure that the desired outcome is achieved.
For example, you might conduct spot-checks on their products, request progress reports, or schedule regular meetings to discuss progress
Step 6: Evaluate Results
Once the plan is complete, it’s important to evaluate the results. Did the supplier meet the desired outcome? Did they improve their performance? This evaluation can help you determine if the supplier is meeting your expectations, and can also help you identify areas for improvement in your own processes.
For example, you might conduct a survey of your customers to see if they’ve noticed an improvement in product quality. You can also evaluate your own internal processes to see if there are ways to improve the way you work with suppliers in the future.
Conclusion:
Creating a supplier performance improvement plan may not be the most exciting task in the world, but it is an essential part of any procurement professional’s job. By following these steps, you can create a plan that helps your supplier improve their performance and strengthen your relationship. Remember to be specific, communicate clearly, and monitor progress to ensure that the desired outcome is achieved. Happy planning!