Supply Base Optimization
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The document summarizes supplier performance measurement and optimization at ADMA-OPCO. Key performance measures include delivery, quality, responsiveness, and cost effectiveness. Suppliers are evaluated and categorized as A, B, or C based on their performance scores. Rewards and punishments are used to incentivize supplier performance and improve relationships. The current evaluation procedure is being updated to include bid price analysis and improve collaboration between procurement and vendor teams.
Supply Base Optimization
- 1. Supplier Performance Measurement and Supply Base Optimization Mubarak Al-Mansouri Procurement Officer Drilling Section 10 August 2009
- 2. Supplier Performance Measurement Supplier Performance Measurement ( SPM ) is the process of measuring, analyzing and managing supplier performance in order to Improve quality Reduce costs Mitigate supply risk Drive continuous supplier improvement
- 3. Objectives Implementation focus on critical items, Drilling Review Suppliers performance on a regular (bi-annual) basis Give preference to suppliers with good performance track record Provide feedback to suppliers in order to improve poor performers Develop closer relationships with suppliers Enhance tender competition by increasing number of top performing suppliers
- 4. Sources for Performance Data MAXIMO (Tender response / price / delivery / discrepancies) End-user feedback (Material Specification) Direct contact with supplier Supplier survey Public channels (press release, TV, Web, etc)
- 5. ADMA-OPCO Key Performance Measures Delivery Post – Award Quality Responsiveness Pre-Award Cost effectiveness (Price) Contract Stages Factors
- 6. Weighted Matrix Elements Factor Weight Measure Rating Score = (Rating / max(Measure)) x Weight
- 7. Weighted Performance Matrix 12 ¼” Rock Bit ( Milled Tooth) 86 70 100 Total 16 4 16 4 20 Responsiveness 8 4 10 5 10 Cost effectiveness 30 5 12 2 30 Delivery 32 4 32 4 1 – 5 (high) 40 Quality Score Rating Score Rating CRESCENT EMDAD Rating Weight Factor
- 8. Supplier Categorization Careful evaluation of the performance record results in one of three categories below. Category A (60-100%) includes near-perfect suppliers requiring no improvement assistance. Category B (40-60%) includes suppliers falling short now but demonstrating performance potential. Category C (0-40%) , likely the largest, includes suppliers incapable of meeting current or future performance requirements.
- 9. Rewards Follow on business Recognition Punishment Litigation and restrictive actions Not awarding future business Downgrading a supplier Supplier Relationship Management
- 10. ADMA OPCO, Current Draft Vendor Performance evaluation procedure completed and awaiting approval Current procedure excludes analysis of bid price Vendor Performance Team currently carrying out attachment with Procurement Team to familiarize themselves with the buying process
- 11. " Performance gap " exists between what suppliers are capable of achieving and what they currently demonstrate through their Cost controls Quality performance Customer responsiveness Commercial division is responsible for closing this Gap. Create dedicated supply management teams to teach supplier how develop itself. Further Target Recommendations for ADMA OPCO
- 12. Thank You!