Description
Government buyers are operating in an increasingly dynamic commercial and technological environment.
Effective procurement and monitoring of supplier performance is critical to controlling the risks and costs involved in procurement.
Objective:
- The objective is to provide information about simple, practical tools for developing supplier performance monitoring strategies.
- It explains the concept of supplier performance monitoring and provides helpful hints on when and how it should be implemented.
Output:
- Supplier Performance Report
Managing and monitoring suppliers’ performance is necessary for a department to assess whether it is receiving value for money.
Managing and monitoring suppliers’ performance is important when procuring goods and services for which there is a high relative expenditure and/or difficult to secure supply.
Suppliers’ performance should be managed and monitored before, during and after the establishment of supply arrangements.
WHY IS SUPPLIER PERFORMANCE MONITORING IMPORTANT?
Managing and monitoring a supplier’s performance is one of the tools that can be used in meeting the principles of Government’s procurement objectives.
Sound supplier performance monitoring and management strategies offer the following opportunities:
- Assist departments to reduce internal transaction costs associated with procurement;
- Contribute to effective risk management;
- Contribute towards the development of strategic relationships with suppliers;
- Assist in developing supplier capability;
- Assist in the development of supply chain management strategies; and
- Improve supplier and purchaser performance.
For which purchases?
The extent to which it is necessary to monitor and manage a supplier’s performance should be determined on the basis of risk management and cost benefit assessments.
Monitoring and managing performance should be a priority when purchasing goods and services that are high relative expenditure and for which supply is difficult to secure.