Industry Agreed Supplier Key Performance Indicators (KPIs) & Associated Transmission Standard (AKA Supplier KPI 2.0)
CLICK HERE to view the PTP (Project Team Proposal).

Purpose

The purpose of this project is to agree a set of standardized (formula and definitions), industry-specific KPIs that will support the process of supplier performance monitoring and management as well as the creation of a data transfer protocol to automate the transfer of this data from supplier to operator.

Value Proposition/Business Case

By defining, agreeing and using a set of standardized supplier performance KPIs significant benefits would be delivered to both Supplier and Operator. Many of these benefits have been discussed and captured during our initial project meetings in early 2015. These include:

Industry standard = simplification – At the highest level, agreeing and adopting a set of supplier performance KPIs will reduce the level of complexity associated with capturing, manipulating and presenting the performance data. Additionally, this should reduce the effort required to prepare for performance review meetings as it will no longer require manipulation for each meeting to suit specific customer/client/geographic requirements.

Industry-agreed, external reference point Having an external reference point will provide time savings to organizations looking to develop their own supplier performance KPIs. They will not be starting with a blank page, but will have a strong starting point to build upon. Supporting the agreed KPIs will also support internal governance, which in turn should reduce the ‘cottage industry’ of developing different flavors of the same KPIs.

Creation of data transfer protocol Automated transfer of supplier performance KPI data will provide the largest benefits to both Suppliers and Operators. It can be reasonably assumed that automating this process will deliver:

  • Financial savings – No longer requires additional manual intervention to provide data in a specific format
  • Time savings – Data is entered once and then transmitted to whomever requires it; Reduced time collating supplier performance KPI data (on both sides); Reduced time preparing performance review reports
  • Improved data quality – Data is entered once only. Removing additional manual intervention to share data in different formats will also remove any opportunity for ‘fat fingering’ data points, creating incorrect performance KPI results.
  • Data is available in near real-time, providing the operator with the ability to intervene, if needed, at a much earlier stage, in turn reducing any associated risk
  • Integration with existing systems. IT departments and software vendors will be able to accept supplier KPI data without manual intervention.

Improved data accuracy – Agreeing and adopting a set of standard supplier performance KPIs will increase user confidence behind what is being presented. In turn, quality data supports better, efficient decision making. It should also mean that KPI results will be available in a more timely fashion, allowing for quicker feedback which can mean a faster response to a negative performance trend.

Benchmarking – Standard Supplier KPIs, adopted by the industry, opens up the opportunity to pursue KPI benchmarking (internally and against other similar industries).

Ability to compare – Suppliers will have apples to apples comparison of their performance, across multiple customers.

Use of agreed KPIs in contracts – Using the agreed supplier performance KPIs as part tender process will make it easier for suppliers to provide the necessary data while making it easier for the buyer to compare. 

Additionally, having industry standard KPIs will provide a useful starting point for those organizations without a formal SPM program. When the time comes there will be industry-agreed KPIs available to them, allowing them to get started on the SPM road sooner. 

Sponsors

Supplier KPI 2.0 is sponsored by Chevron (Tom Lennon) and ConocoPhillips (Roger Bhalla).

Contact

Fore more information, email Chris Bohill, the Project Team Chair, at c.bohill@8over8.com.

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