In all industries, it is important to monitor and evaluate supplier performance continually, to drive the highest quality standards and encourage streamlined operations. Supplier performance management feeds into commercial negotiations and ensures compliance regulations are being met. In the food and drink manufacturing industry, supplier quality and compliance are especially pressing. Whether you are a small artisan producer or a global beverage conglomerate, the quality, efficiency, and reliability of your suppliers can make or break your business. It is vital that businesses have a strong supplier performance management process in place.
Why is supplier performance key for the food and drink industry?
Increasing appetite for supply chain traceability
Consumers today are more conscious than ever about the origins of their food and drink. They want assurance that the products they consume are ethically sourced, sustainable, and high-quality. While you can provide evidence of this from within your own business, you also need to be able to provide guarantees for standards across your supply chain. Monitoring supplier performance closely and regularly evaluating the businesses in your supply chain means you can maintain high levels of traceability and “farm to fork” assurances of your products standards, sustainability and ethics.
Outdated processes persist among food and beverage suppliers
A successful supplier/buyer relationship should be transparent and efficient, operating with the latest processes and technologies. However, recent research revealed that 71 per cent of food and drink suppliers admit that outdated processes sometimes or often create issues in their work – with one in four unfamiliar with the available technology to manage their customer relationships. With such high rates of poor processes, hold your supply chain to account and drive improvement with a strong supplier performance management framework, that includes assessment of quality of communication and operations.
Rising costs
The food and drink industry faces an ongoing challenge of rising costs, from raw materials to raised freight rates. In fact, food and drink manufacturers expect their costs to rise by 2.1 percent for the year to March 2025. Efficient supplier performance management allows businesses to get the most out of their supply chain, negotiating better terms, getting the highest quality products for their investment and identifying cost saving opportunities. Rating suppliers on cost parameters can allow you to spot where supplier swaps might be a route to improve profitability; surveys by the Food and Drink Federation reveal that manufacturers often weather difficult times by switching suppliers. Sort the wheat from the chaff with effective supplier performance management.
How can you improve supplier performance management?
1. Set clear expectations and metrics
Establish clear, measurable standards for supplier performance from the outset. This includes quality benchmarks, delivery timelines, and compliance with industry regulations. Regularly review these metrics to ensure suppliers are meeting expectations and to identify areas for improvement.
2. Leverage technology
Utilise technology solutions that improve visibility into your supply chain. Tools like OneAdvanced’s Supplier & Contract Management allows you to see key supplier performance metrics on easy-to-use dashboards, evaluate suppliers online with feedback and rating systems and complete supplier performance management assessment forms. Tools like these streamline the process of assessing supplier performance, allowing you to identify next steps easily – like changing suppliers or communicating performance improvements that need to be made.
3. Develop collaborative relationships
Treat your suppliers as partners rather than mere vendors. Foster open communication and collaboration to address any challenges together. This partnership approach encourages suppliers to take ownership of their performance and align their goals with your business objectives.
4. Invest in supplier development
Support your suppliers in upgrading their capabilities, whether through training programmes, technology investments, or process improvements. By investing in their growth, you not only enhance their performance but also strengthen the long-term viability of your supply chain.
5. Regularly evaluate and reward performance
Conduct regular performance reviews to assess supplier contributions to your business goals. Recognise and reward those who consistently exceed expectations, as this motivates them to maintain high standards. Additionally, consider diversifying your supplier base to minimise risks and encourage competitive performance.
Mastering supplier performance management is integral to thriving in the food and drink industry. Strong performance management processes ensure you are constantly improving efficiency and profitability not only within your business, but through the producers and manufacturers that provide the materials and ingredients you need. Take the necessary steps to improve supplier performance and see the positive impact it can have on your business.
OneAdvanced’s Supplier & Contract Management provides:
- Supplier performance dashboard metrics
- Supplier data requests
- Industry best practice performance management framework
- Feedback and rating systems for internal users to evaluate suppliers
- Supplier and contracts milestones to ensure deliverables are met
Find out more about Supplier & Contract Management.
