Third Party Supplier Performance Management
Companies continue to expand across the globe and as they do, they rely more on third parties not just to provide products, but as channel partners, sales agents, distributors, and more. In fact, more than 60% of most companies’ revenues are now generated through third party relationships.
With so much riding on the success of these third parties, companies need to ensure that they are delivering the level of performance defined at the onset of a contract or relationship. As a result, third party supplier performance management is essential for organizations to avoid quality issues that could detract from the company’s fiscal and operational performance.
Challenges of Third Party Supplier Performance Management
Continually monitoring, tracking and evaluating third party performance is a significant undertaking, however, and due to the complexities and resources needed, many companies don’t track third parties consistently, if at all. What should you track? Which third parties need close attention? How do you gauge good performance and how often do you need to do so?
Performance management best practice is to monitor third parties for the quality of their service or product as well as for any risk they introduce to the organization. Companies need to establish risk controls to measure third parties against to make sure they are maintaining regulatory compliance, are viable financially, are taking information security seriously and more. Tracking all these risk factors is a daunting, but necessary, task for making business decisions about the value and exposure third parties introduce.
In order to set up a strong supplier performance management program, companies need to have clear, actionable objectives that are set up during the engagement and negotiation phases of each third-party relationship. In the end, tracking third party supplier performance in a timely and systematic manner provides visibility into performance status so companies can work together with their third parties and optimize the value of their relationship.
Hiperos 3PM Performance Management
Hiperos 3PMTM Performance Management simplifies the third party supplier performance management process. It eliminates manual tracking and provides consolidated, flexible, and consistent methods for measuring third party performance against expectations. It enables companies to ensure their third parties adhere to or exceed contractual Service Level Agreements (SLA’s) and Key Performance Indicators (KPI’s) and automatically notifiesy the appropriate people when performance measures are at risk of failing expectations.
For less critical relationships, companies can take a Balanced Scorecard approach that applies to a range of suppliers.
With Hiperos 3PM™, companies can now successfully implement a comprehensive supplier performance management program that plays a vital role in the status of ongoing third-party relationships, from successful completion or expansion of the relationship or activity to renewal or termination.
Key Benefits of Hiperos 3PM Performance Management
- Visibility into third party performance
- Optimize value of third party relationships
- Track performance trends
- Maintain auditable assessments over the life of the relationship