Strong Vendor Management Requires New Performance Measurements

The increasing importance of innovation and strong vendor management to most sourcing and vendor management (SVM) professionals is having a major effect on the dynamics of sourcing strategy. In Forrester's Forrsights Business Decision-Makers Survey, Q4 2010, 56% of all respondents indicated that they plan to have a special innovation council in place within the next 12 months. In most cases, this council will comprise internal employees and external suppliers and include a strong role for the most strategic suppliers within the organization. To manage those suppliers, 48% of the respondents indicated that they will expand their vendor management capabilities. But managing such vendors requires information about the suppliers that most organizations do not currently track systematically. This report describes new criteria in vendor management that vendor managers need to track in their most strategic supplier relationships.