Through one way to determine the right metrics

Through strategic management of the supply driven market, a competitive advantage can be achieved (Hesping and Schiele 2016). Obviously, not all products and not all platform -supplier relationships are to be managed in the same way. By analogy to the platform context, a differentiated treatment of suppliers and distinct management of platform-supplier relationships can be assumed to have a major impact on the satisfaction of suppliers with the relationship (Van Weele 2009).

The platforms use enabling and controlling strategy to evaluate their suppliers. These strategies can be used separately or combined and can change from a stage to another over time. The migration of these strategies along the maturity stages it is mostly influenced by the relationship of the platform owner with the suppliers and by the type of industry that the platform activates in.

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When companies describe their efforts to evaluate suppliers, the majority measures supplier performance in some fashion, but only few are satisfied with the results of their efforts. Many firms are unclear about what and whom to measure and how to effectively use the measures they collect (Gordon, 2008). Procurement, quality, and supply management professionals understand how critical supplier performance is to their firms, but many find that making a compelling business case to senior management and gaining support and resources is challenging. The problem is that many companies do not know how to develop a good evaluation process, especially one that gets measurable results and shows return on investment (Gordon, 2008). Supplier Performance Evaluation Management cannot be developed and deployed within just one department, such as just purchasing or just quality, as it has to involve many stakeholders within the firm and the supply chain. Or, some firms believe that implementing a software application with scorecards will provide the silver bullet to solve performance problems. Executives feel proactive and in control with dashboards. Using executive dashboards can be effective, but it is not a substitute for building the relationships with suppliers that provide insight and understanding and help avoid risks. Sitting at arm’s length and reviewing too few, too many, or not the right metrics doesn’t work. Some companies evaluate suppliers and manage their performance simplistically—aiming to find the right metrics to put on the scorecards. And one way to determine the right metrics is to find out what metrics other companies are using. Neglecting to use metrics aligned to platform’s goals and strategies can cause a failed initiative and may not produce successful results. (Gordon, 2008)

Another important reason that firms find Supplier Performance Evaluation Management challenging is that it involves organizational change. Not addressing the important change management aspects of supplier evaluation and performance management as well as supplier development can result in a less successful process and provide less return on investment than anticipated.

Based on Gordon’s (2008) research, below is an in-depth presentation of the evaluation approaches with their advantages and disadvantages.

 

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