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Language: English

A proven 5-step framework for managing supplier performance


Supplier Performance Management Sourcing & Procurement Supply Management

Despite fluctuations in our global economy, globalization and outsourcing trends have continually accelerated. In a globalized and outsourced environment, managing the performance of suppliers has taken a new sense of urgency, particularly in the executive suite. In many cases, half of every dollar in revenue can be spent on goods and services purchased from external suppliers. As companies focus on their core competencies and outsource their non-core operations, this percentage has increased, leading to an increased dependency on suppliers. In certain industries such as technology and automotive, purchases from external suppliers can be over half of the total cost of new products. Increased dependency on suppliers not only significantly increases an organization’s supply and pricing risk, but it also increases exposure to adverse scenarios such as a safety issues or lack of regulatory compliance. To continually improve operation performance, manage costs and reduce regulatory risks, a company must be able to not only select the appropriate suppliers, but also to monitor and manage performance of these partners over time.

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