SI Review: May 2012

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Straight Talk from the Customer

Suppliers can benefit from tracking their numbers

By Jennifer Bailey

Pepsico, like many other companies, utilizes scorecards to gauge our suppliers’ performance. The scorecards also helped us determine how to structure our tiered system of preferred suppliers within our managed service program (MSP).

As a category manager, I looked at the scorecard to show me how much effort a supplier was putting into filling jobs for us (number of jobs responded to), whether they understood the technology (number of candidates called in for interviews), grasped our culture (ratio of offers to interviews) and had solid relationships with the candidates being presented (ratio of placements to offers). While these may not be completely fair measures of those attributes, it’s how I read the numbers on the MSP scorecard.

Keep an Eye

The use of scorecards doesn’t need to be one-sided. Do the MSPs you work through provide you with yours? I highly recommend that suppliers keep their own scorecard and review whatever data the MSP shares with them.

Even though the MSP should be sharing the scorecard they keep from time to time, it may not be in a timely manner and it may not capture the numbers that are important to you. There are two reasons for a supplier to keep an eye on their own numbers.

Prove value. The first reason is to be able to show a client your value to them at any given time. As the manager of PepsiCo’s contingent labor program, I found there was typically little to distinguish one supplier from another except for the color of their logo and the data they could show me. While having good account executives is helpful, winning business on the basis of your salesperson’s personality is not a sustainable business model. However, if you are able to demonstrate to your clients what you’ve already done for them, you’re likely to find a much more receptive audience. Further, if you’ve got a proposal for a change you’d like to see in a client’s program, take along a sanitized scorecard from another client to demonstrate how that change has improved performance in a similar setting. I know it changed my mind to see the numbers as well as the supplier’s commitment to operating and making business decisions based on its factual performance rather than easily made promises of extra efforts on my company’s behalf. It’s also very helpful, and a great way to bring value to your clients, when you can show which ratios are insightful and which ones might just be nothing more than noise.

Client value. The second reason to keep and monitor your own scorecards is to track the value of the client to your firm. When PepsiCo began the process of tiering suppliers, several suppliers asked to remain on our active roster even though they hadn’t placed anyone with us in more than a year. And the account executives could never articulate why they wanted to retain us as a client beyond name recognition. Truly, being able to mention our name in a sales presentation to potential clients does not indicate value. If the potential client calls for a reference, do you really want them to hear that you might have done some good work for us several years ago but haven’t done anything recently?

I’ve gotten that message myself when checking suppliers’ references, and it doesn’t add anything to a supplier’s desirability. In fact, it makes me wonder whether the potential supplier is just clueless or is actively trying to misrepresent itself. It would be better by far to list lesser-known clients that have excellent scorecards on you, where both the objective reference of your numbers and the subjective reference of the call will be in accord with each other.

As a category manager, I found that suppliers’ scorecards were a source of sanity when everything else was in flux. They helped bring clarity to our decision making process, and I think they could serve a similar purpose on the sell-side as well.

Jennifer Bailey is category manager of corporate services at PepsiCo’s Strategic Sourcing Consortium.

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