Top 4 Questions to ask for a better Supplier Reporting

Vendor Management is a complex process that comes with a lot of underlying responsibilities – sourcing, managing the relationship, steering, developing the supplier landscape, risk management, and many more. 

Setting up Vendor Management performance tracking might sound like an easy task, but judging by the direct implications on overall costs and organizational effectiveness, you might want to take a more tactical approach!

One of the activities that sits at the core of successful vendor management is creating transparency on the performance of your vendors. 

There are a few critical questions that you need to find the answer to, and we will tackle them step by step below:

Having outsourced services to your suppliers, implies that they are responsible to deliver reporting on their performance – and you are not wrong! However, what you need to think about and ultimately decide when it comes to reporting is the structure, layout, intervals, reporting channels etc. Firmly request that the suppliers are providing this information, ideally as part of your contractual agreement.

Nevertheless, reporting shall not only be provided – but also be processed, analysed, and considered in form of measurements. In other words, reporting needs to be set up as a process.

So, to answer the question – the responsibility for implementing a meaningful reporting process is shared between you and the supplier. That being said, the overall accountability is yours.

The first point of validation of reporting data should always be where the service is located – your operational teams who fulfill the They are managing the supplier on a daily operational basis, they work together closely, and they have an intrinsic and extrinsic perception of the delivery quality.

Every supplier reporting should be subject to clearance of operational teams. They need this information to create transparency on the delivery, derive action plans, set improvement measurements, etc. And Vendor Management needs their approval to ensure, that the provided information is reliable.

What the suppliers shall report is ideally contractually agreed – and before that, aligned between Vendor Management and operational teams. Each side has a different use case for that particular data, and therefore different needs.

• Operational teams need data to judge how their area is working.
• Vendor Management needs information on how suppliers are operating holistically.

Good reporting requirements reflect both – operational needs and Vendor Management aspects - and provide additional value on all levels.

After approval by operational teams, each supplier should provide the reporting information to Vendor Management. Here, the individual data on engagement level needs to be consolidated on supplier level to get overarching transparency on each suppliers’ performance.

Therefore, it is key to define core pillars – to provide clear reporting to the suppliers so that they know what you expect and to get the data in a way which allows you to efficiently carry out your consolidation activities.

What are those core pillars? - you might ask yourself to answer that naturally occurring question. To answer that question from several perspectives, you need to define the following as a base line:

• Input channels – where should this information be provided to you (email, Teams channel, SharePoint, etc.)?
• Data format – how should this information be provided to you?
  Via PPT, Excel, Word, PDF, standardised lists, data flows, via interface to a data lake?
• Deadlines – when shall the information be provided?
  Set clear deadlines for monthly and quarterly data provision!
• Notifications – who shall be informed about new available data?
• Approval – how must approvals from operational teams be secured and how this information shall be stored?
• Data categories – which data needs to be provided?
  Set clear requirements on all necessary aspects which need to be reported on (date, period, supplier name, engagement name, responsible…).

Once you have defined this baseline, providing the required data should be just a repeatable exercise for the suppliers. The more time you invest into this initial setup, the more efficient you can consolidate afterwards.

Therefore, keep the following in mind:

• Data needs to be comparable!
• Reporting shall provide an overview on the overall and complete supplier performance!
• Reporting shall not only showcase the quality of the different engagements serviced by the supplier, but also the impact on others.
  

From a Vendor Management perspective, reporting serves different needs. There is a collection of use cases, and while each of them is surely important, there are definitely some critical ones:

Define what is important for you – and consider what was mentioned in point number 1:

“Good reporting requirements reflect both – operational needs and Vendor Management aspects - and provide additional value on all levels.”

In the end, the best reporting is not providing value when it is not evaluated and analysed. Take your time, review it, compare it, make conclusions, define subjects with need of actions – and improve what`s necessary.

And what`s next?

Let us go back to step 1 for a moment – because this is the critical one. Suppliers will report what you have contractually agreed with them. Ideally, all your suppliers report in a similar way (same structure, same KPIs, same intervals, etc.) so that you can benchmark them, identify red flags and risks.

If that`s not the case currently, then you have a good starting point for an in-depth analysis of your supplier landscape, reporting structure, and the creation of transparency on improvements.

Let`s discuss to see where we can help you on this!