Establishing Accountability in Supplier Management

supplierA93921079To be accountable for something means that you are answerable for that thing, be it goods, services, documentation, etc. The crux of accountability is that it can’t be delegated and only one person can be ultimately accountable for something. Accountability with respect to supplier management shows up in many ways. First, when a purchasing organization establishes a contract with a supplier, it is critical that all necessary accountabilities are clearly defined in the contract. Second, it is critical for success that the purchasing organization uses one consistent voice to communicate with its supplier.

Purchasing organizations should establish a clear “point of contact” for each supplier who owns the relationship between the purchasing organization and the supplier. Without clear ownership in place, suppliers will often arrive at different arrangements with different parts of the purchasing organization, which can result in significant confusion about the level of service that the supplier is committed to providing. It also results in no centralized management or accountability for supplier-related performance improvements. However, when an organization establishes a single, accountable point of contact for each supplier and that party owns the relationship with that supplier, then the organization can benefit from a clear plan of action, and it can centrally manage supplier performance improvements.

For example, when organizations lack a party that can be held accountable for each supplier relationship, improvements in supplier performance are often identified, but they’re not formally tracked and owned. When improvements are not formally documented, tracked, and owned by a clearly defined, accountable party, then all too often those improvements simply don’t happen. It’s one thing to have an outage once. It’s another thing all together if a supplier could make changes to prevent the recurrence of an outage but chooses not to make the improvement because the purchasing organization does not signal that this is a priority.

Next week I’ll discuss the final simple thing, engaging suppliers in change management.

Reproduced and available for download from Global Knowledge White Paper: Supplier Management: Five Simple Things Your Organization Can Do to Improve Supplier Performance

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