Supplier Relationship Management and Performance Measurement
Relationship management
Relationship management builds trust and value with suppliers. Relationship type follows segmentation: transactional, operational, strategic, or partnership. Governance includes executive sponsors, business reviews, issue escalation, and joint improvement. The relationship owner is accountable for outcomes; the contract manager handles obligations.
Performance measurement
- Use a balanced scorecard: quality, cost, delivery, risk, compliance, innovation, and experience.
- Link SLAs to business outcomes and customer experience.
- Combine lagging and leading indicators; review trends, not just monthly snapshots.
- Include supplier self-assessment and independent verification.
- Act on results: correct, escalate, develop, or exit.
Worked example
A cloud supplier meets 99.9% availability but customer complaints rise. Availability is a lagging infrastructure metric; the scorecard adds incident communication time, restoration time, and customer satisfaction. Reviews show slow communication during incidents. A joint improvement plan sets a 15-minute notification target and monthly testing. Reasoning: contractual compliance can coexist with poor service experience; measure what customers value.
Traps
- Measuring only SLA compliance and ignoring experience and risk.
- Holding reviews with no decisions, owners, or dates.
- Escalating too late or without a defined path.
- Treating strategic suppliers transactionally and expecting innovation.