A SIMPLIFIED, RESULT ORIENTED SUPPLIER PERFORMANCE MANAGEMENT SYSTEM TESTING FRAMEWORK FOR SME

Background: Supplier performance management continues to be a significant concern for small & medium enterprises (SME). How can small & medium enterprises better position themselves to check and sustain actual supplier performance improvement? A key framework is the establishment of a value-added supplier performance audit program that places significant emphasis on supplier performance controls. A value-added supplier audit program can help SME mitigate business and regulatory risk while reducing the cost of poor quality (COPQ). Thus a good supplier performance audit program is the cornerstone of supplier performance management integrity.

Methods: By acknowledging and addressing the challenges to an effective supplier Performance Audit program, this paper proposes an objective framework of supplier performance audit program, built on a strong, yet versatile statistical methodology - Analysis of variance (ANOVA). This performance audit framework considers process definition, standardization, review of the contemporary literature on ANOVA & its practical application in supplier performance scorecard of one of the reputed Sports Goods Industry in India.

Results and conclusions: The advantages of this framework are that: it simultaneously considers multiple supplier performance in multiple time frames and effectively identifies the differences across the suppliers in terms of their performance. Through this framework the organization will be able to increase the odds of performing a predictable and successful implementation of a value-added supplier performance audit.