This is the Web-based version of this article.
How To Spot a Poorly Managed Supplier
PurchTips - Edition # 239
September 20, 2011
By Charles Dominick, SPSM, SPSM2
How Competent Is Your Supplier's Management?
Any procurement professional in her right mind will get nervous about using a poorly managed supplier. How can you tell if a new supplier is poorly managed? Here are five things to look for when evaluating a supplier.
High Turnover - A constant change in personnel makes it difficult for a supplier to perform consistently, which is something important to you as a customer. Mass employee departures are a symptom of management that is disorganized, harsh with its employees, or just plain incompetent. Turnover in leadership roles is an even more serious indicator of poor management.
Declining Financial Performance - Most businesses strive for better year-over-year financial performance - greater revenues, bigger profits, a higher Altman Z-Score, etc. If these numbers are getting worse, not better, it could be indicative of poor management. In some industry or economic cycles, an occasional decline is expected. But if you use industry averages as a baseline and the supplier's financial performance trend is worse than the industry's, management may be to blame.
Lack of Success Metrics - A critical role of management is to establish performance metrics and set goals. Good managers know whether the company is performing well, poorly, or somewhere in between. Ask your supplier's senior management how performance is tracked and success is measured. If there is a lack of metrics, the supplier is not serious about maximizing its performance for its customers.
Workers Are Unaware of Corporate Goals - Even if a supplier has success metrics and goals, if non-management workers lack visibility into goals, that's an obstacle to them focusing on what's important. The people making a product or providing a service must know what constitutes success to be truly effective.
The Supplier Has A Bad Reputation - Almost every company has had a disgruntled customer at some point. But if you learn from multiple sources - Internet posts, Better Business Bureau ratings, procurement peers, etc. - that a supplier consistently underperforms, it's likely that the supplier is poorly managed and unlikely to do what's necessary to satisfy you.
(keep reading for a FREE Offer)
Spotlight On Professional Development Opportunities
 |
Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.
You see, today's employers refuse to reward employees for yesterday's skills. They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.
Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (with the option of getting a Study Guide on an iPad or an iPod Touch) at:
www.NextLevelPurchasing.com
The Latest Purchasing News
- Purchasing Managers/Directors: Are you tired of having an underperforming team and no plan to fix it? If so, we have good news for you! You may qualify for a free service that hundreds of leading companies have used to benchmark, plan, and drive positive change. To learn more, visit: www.NextLevelPurchasing.com/benchmark
- Chat with other NLPA members! Log in at http://www.nextlevelpurchasing.com/login.html
- Considering a career move? Browse jobs preferring candidates with the SPSM® Certification at:
www.NextLevelPurchasing.com/jobs
FREE Offer!
How can you test your purchasing knowledge and have a little fun, too? Try our FREE "Million Dollar Savings Game" which is one version of many different games we've added to each of our online classes.
Copyright 2011. This article is the property of Next Level Purchasing and may not be copied or republished in any form without the express written consent of Next Level Purchasing. Click here to request republishing permission.
